Electricty Asset Leases: Will there be a Consistent Evaluation of Bids?

Extract from Hansard

Legislative Council
18 November 1999

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

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The Hon. SANDRA KANCK: I seek leave to make an explanation before asking the Treasurer a question about the privatisation of South Australia's electricity assets.

The Hon. SANDRA KANCK: It is actually an important question. The current controversy regarding the lack of a consistent evaluation basis for the financial details of the bids for the state's electricity assets raises the vital issue of whether or not the leasing process will provide South Australia with a reliable electricity supply.

The Auditor-General told the Economic and Finance Committee, `The information that has been requested from the bidders is insufficient to allow the government to determine which of the bidders are offering the best price.' Discussion has thus far focused on price, but I have not heard anything said about security of supply. A brief reflection on the social and economic mayhem that Auckland endured after its electricity supply crashed confirms the importance of operational experience.

I note that in his ministerial statement to this Council yesterday the Treasurer indicated that details of the bidders' operational experience were included with the indicative bids. My questions to the Treasurer are:

1. Did the details of the bidders' operational experience include details of operational performance?

2. Will an independent assessment of the bidders' operational performance be obtained prior to a final decision?

4. What weighting will the bid assessment process give to previous operational performance?

The Hon. R.I. LUCAS (Treasurer): To be fair, the honourable member obviously drafted her question prior to question time. I have already responded to two previous questions explaining the difference between the indicative bid stage and the final bid stage. With regard to the quote of the Auditor-General from last Wednesday's Economic and Finance Committee, my response is exactly the same as earlier: the government, from 20 August onwards, had advised the Auditor-General's staff that supplementary bidding rules would be issued for the final bid process. So, the process for the indicative bid is different to the process for the final bid. I do not want to repeat the explanation I gave before, but the honourable member's question traverses the same ground, that is-

The Hon. R.I. LUCAS: Sorry, the honourable member's explanation does, and that is the supposed criticism that there is no consistent basis as to how we will evaluate these bids.

The Hon. R.I. LUCAS: I thank the Hon. Mr Cameron: I am delighted to hear that, together with my colleagues, there is at least one member who does understand it in the chamber. In relation to operational experience-and I will need to refresh my memory as to the detail-I would be surprised if information as to the current performance of existing utilities that the bidding companies operate was not a part of that.

In relation to the final part of the question, I do not think it is in the best interests of taxpayers and in the best interests of limiting the liability to the state to enter into a public debate about how we will weigh various criteria against other criteria for the successful bid. This is part of the issue that the Auditor-General was talking about, that is, ensuring that we have an appropriate evaluation process in place in terms of evaluating the bids. I do not believe that publicly speculating about the weighting of various issues would be part of an appropriate evaluation process. Therefore, I politely decline to put myself in an area where I potentially might be criticised by the Auditor-General for publicly talking about some of these issues.

What I did indicate in the ministerial statement yesterday is that we sought a whole range of information which obviously includes information on the operational experience of our bidding companies. This government is not interested in getting top value and minimising risk, which are the key issues we have talked about, and having a company that cannot run an electricity system. It is foolishness to even think that a minister or a government would want to have somebody who cannot run an electricity system.

The Hon. R.I. LUCAS: It would be electoral madness, electoral suicide-all the above. We want a system that works. I would have thought that even the government can be given the benefit of the doubt that it is not about trying to destroy our electricity system, sell it off at the maximum price and not worry about the standards for service and delivery. I would have thought that our bona fides-the rigorous regulatory system, the establishment of the independent regulator, the Electricity Ombudsman's scheme, and the codes I have issued in terms of service standards which must govern the operation of the new businesses, which is a highly regulated industry-were well demonstrated by our genuineness, in terms of the regulatory package, that we have looked at.

There is nothing in it for the government to be approving a bidder that will run down the system and cause not only electoral grief for it but obviously a lack of service and quality service for the consumers of South Australia. So, it has been and will be an issue that the government will appropriately consider when it decides who is the successful bidder.