Electricity Retained Interest Corporations Bill 2015
28th May 2015
Mr GREG PIPER (Lake Macquarie) [3.45 p.m.]: I speak on behalf of my constituents in debate on the Electricity Network Assets (Authorised Transactions) Bill 2015 and the cognate Electricity Retained Interest Corporations Bill 2015 and make it clear from the outset that I do not support them—a position I believe I share with the vast majority of my constituents. I believe this not just because of the consistent polling showing that up to 70 per cent of people in New South Wales do not support the sale of our poles and wires, but also because of the strong feedback on this issue gathered on the front line during the recent election campaign. The privatisation question was foremost in many, if not most, voters' minds when they cast their ballot.
Why are people opposed to this assets sale? They are opposed because they fear increased power prices in the long-term. They are concerned about job losses within the industry. They are worried that the new owners of our electricity networks will cut corners to make them more profitable, resulting in reduced customer service. They are concerned that the next time there is a big storm like the one that recently tore a destructive path through the Hunter, electricity customers will wait weeks, rather than days, to have their power restored as downsized work crews struggle to meet the demand for their services. Additionally, people in my electorate are concerned about the loss of recurrent income to the State budget, which has totalled around $1.7 billion annually. The Government has not adequately explained to the people of New South Wales how they are getting a better deal from selling one of their most valuable assets for an estimated $13 billion up front, rather than reaping in full the generous dividends it will return for the next 99 years.
I know there is more to it, but that is the simplistic question people ask. The Government has been too focused on promoting what it sees as the big-picture outcomes at the expense of investing effort in explaining in detail issues such as those I have mentioned. Notwithstanding the March election results, the Government has failed to prove its case on this issue. It has produced glossy brochures and dangled infrastructure carrots, promising to bust congestion and other desirable things, but this has not convinced the owners of this infrastructure—the people of New South Wales—that they are getting a good deal. There has not been any genuine community consultation on this important decision—only a glitzy publicity campaign spruiking the promise of instant riches from the leasing or sale of assets.
We are being fed a sales pitch. We have been told that the State will continue to hold at least a 51 per cent interest in the New South Wales electricity networks—but this assurance is not what it seems. The legislation proposes the sale of 50.4 per cent of Ausgrid, 50.4 per cent of Endeavour and 100 per cent of TransGrid—and of course, noting the incredible bargaining powers of The Nationals, none of Essential Energy. In other words, the State will not retain a controlling stake in any of those three entities. Even those in my electorate who support the Government in this privatisation have argued to me that there is no risk as the Government is retaining 51 per cent—they are clearly thinking in terms of a controlling interest. The reality is nothing of the kind. If there is sound economic logic behind the lease proposal then there would seem to be no good reason to have restricted it to 49 per cent of the total assets other than to create the appearance of the Government maintaining a controlling interest.
We are told that the jobs of employees are safe and will be transferred to the new owners with all their entitlements and agreed conditions, but the enterprise bargaining agreements for both Ausgrid and Endeavour Energy employees have expired. With Networks NSW chief executive officer Vince Graham having already forecast significant job cuts in order to comply with the Australian Energy Regulator's recent determination, the network employees' position seems far more vulnerable than the Government brochures suggest. I note that the Electrical Trades Union seems to be negotiating with the Government on this at the moment, and I hope these matters can be resolved. Mr Graham indicated, in a document tendered to the upper House committee inquiring into the leasing of electricity infrastructure, that Networks NSW was negotiating with the unions on new enterprise agreements that will involve new redundancy and salary maintenance arrangements.
While having stated my opposition to the legislation—and, indeed, the proposal—I wish to be balanced in my contribution, so I have comments for both the Government and the Opposition. I acknowledge the Premier's long-stated commitment to the policy of recycling assets and his willingness to take it to the constituency at the last election. I do not, however, believe in the concept of single-issue mandates. People make voting decisions for a wide range of reasons and it is over simplistic to attribute an election victory to one policy. At the end of the day, with the majority the Government held going into the election it was near impossible for it to lose; many electorates that were opposed to the poles and wires privatisation no doubt had memories of the failings of the previous Government and were not willing to return Labor to power even in the face of something they had grave reservations about, such as this privatisation.
I also acknowledge that while the Labor Party is stating its opposition to this policy, it is Labor that started the State down the privatisation path with its ill-founded sale of gentrader contracts and other parts of the network. Former Labor Premiers Bob Carr and Morris Iemma, and Treasurers Michael Egan and Michael Costa all had a go at trying to get the sale of electricity assets over the line and remain vocally in favour of privatisation today, along with other party luminaries such as Paul Keating and Martin Ferguson. There are new members of the Opposition and I hope that this belief will change. I mention this to make the point that electricity privatisation is a highly politicised issue, and the public are understandably sceptical of the arguments they hear from both sides in this debate.
The Premier has made much of the so-called safeguards that will be put in place to ensure that consumer rights are protected. But, while I welcome the commitment to put immediate downward pressure on prices and the appointment of Allan Fels as Electricity Price Commissioner, I share the concern of my constituents about what will happen in the longer term. The price guarantee assures lower prices in 2019, but what of the next 95 years of the lease? This question is at the heart of the concern the electorate feels about this sale—that the Government is blinded by the prospect of short-term gain. I do not dispute the Government's claim that the projects promised under Rebuild NSW are important and needed urgently, but does that justify a quick cash grab that ignores the financial consequences for our State—and for network customers—in the longer term?
What problems are we creating for future generations by flogging off profit-making assets? Is there not a more sustainable way to fund these infrastructure projects—say, by borrowing against the assets? Were other options seriously considered or was the ideology of the market and the good of the private sector—even where we are dealing with a natural monopoly—too compelling? There is also much concern about how the proceeds will be apportioned. We know that the vast majority, $14 billion, will go to Sydney for big-money projects such as WestConnex and the second harbour tunnel. The promised windfall for regional and rural areas is much more modest and vague—a bit here and there for roads, rail and water security, and some education and health projects.
It is all welcome spending of course, but the non-metropolitan allocation will not go far given the number of communities it will be stretched between. It is pretty clear that the Hunter Region will not see much, if any, of the proceeds. We are expected to be grateful for the small percentage of funds from the sale of the Port of Newcastle that have been directed to the area, even though the bulk of that money has been sucked up by an unpopular boutique light rail system of dubious value to anyone living beyond the confines of the Newcastle central business district. On that point, if rational economic decision-making were applied to that project, it would not have taken more than a moment to decide to save $100 million and run the light rail along the existing corridor.
We should not be having this debate now as, despite the great importance of the bills, there is no obvious and compelling urgency to dispense with the standing orders that require the bills to sit on the table of the House for five days. Indeed, the upper House inquiry is due to report on Tuesday next week and, like other members, I would have very much appreciated the opportunity to consider that report prior to this debate. I appreciate that there are economic arguments for privatisation but the Government has not made a convincing enough case for the action it proposes to take. If it had more fully examined the options and implications with the community and more explicitly sought and gained a mandate for this action, it would be hard to argue against.
ACTING-SPEAKER (Ms Melanie Gibbons): Order! The member for Baulkham Hills will come to order.
Mr GREG PIPER: Of course, greater criticism along those lines must be made of Labor's approach to selling electricity assets and the State lotteries during its last term in office.
Mr David Elliott: And Qantas.
Mr GREG PIPER: And Qantas. Reasons that the Government might have explored to justify the sale should have included more about emergent technology that might make much, if not all, of this debate redundant. Greatly improved photovoltaic arrays that will be deployed in industrial, commercial and domestic situations coupled with emergent economic and highly efficient battery storage systems, for example, will likely change the power generation and distribution paradigm faster than is realised. That has not been explored in this debate. It is imperative that as this transaction proceeds, as it surely will, the Government does not build in any impediments to our communities being able to move to more efficient and environmentally sustainable technologies in order to prop up revenue for a lessee. On balance, and in light of the information that has been given the community, I must oppose these cognate bills.
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