Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

I move:

That , for the purposes of section 7(3) of the Snowy Hydro Corporatisation Act 1997 , the House approve the transfer or disposal of the Commonwealth shares in the Snowy Hydro Company (incorporated under the name Snowy Hydro Limited) that will occur as a result of the Commonwealth participating in the Initial Public Offer process announced by the New South Wales Government on 16 December 2005.

As members will be aware, Snowy Hydro Ltd is the company that owns and operates the Snowy Mountains Scheme. New South Wales is the majority shareholder, with a 58 per cent stake, Victoria has a 29 per cent shareholding and the Commonwealth owns 13 per cent. On 16 December 2005, the New South Wales Premier announced that the New South Wales government would sell its majority stake in Snowy Hydro and that the public would be given the chance to invest in the Snowy Mountains Scheme through an initial public offer on the Australian stock exchange.

Following the New South Wales decision, Senator Nick Minchin and Minister Ian Macfarlane announced that the Australian government would also sell its minority stake. The Victorian government has since announced that it too would sell its share in the company. I can assure you that the Australian government decided to sell its shareholding in Snowy Hydro only after the most careful consideration. Under this government, electricity generation capacity has increased by 10 per cent, and all the eastern states are now interconnected. In addition, average retail electricity prices fell by 14.6 per cent in real terms between 1994-95 and 2003-04. Energy reforms, including the sale of government owned electricity companies, have contributed to maintaining and improving the competitiveness of Australian industry as a whole. Independent analysis has found that the reforms have contributed some $1.5 billion per annum to the Australian economy.

Electricity prices in Australia continue to be the second lowest in the developed world. The floating of Snowy Hydro will give the company the opportunity to raise capital and grow its business unconstrained by government ownership. Some of the company’s plant and equipment is up to 40 years old. Snowy Hydro, to continue to provide a highly reliable source of water and electricity in the decades ahead, needs to be able to pay for an active and innovative maintenance and upgrade program for the Snowy scheme’s plant and equipment. Importantly, the sale of the company will not change the strict and rigorous rules that secure the water of the Snowy catchment from downstream use by irrigators and for the environment.

The proposed privatisation of Snowy Hydro will not affect water releases or water rights of downstream users in New South Wales, Victoria or South Australia. At the time of corporatisation of Snowy Hydro in 2002, a number of agreements were implemented which regulate the secure water flows. These agreements are legally binding and comprehensive and were developed after extensive consultation with all stakeholder governments, state water authorities and the Murray-Darling Basin Commission, otherwise known as the MDBC. This regulatory framework was entered into by governments as a part of the corporatisation of the Snowy Mountains Scheme in 2002 on the basis that it would continue to apply irrespective of the ownership of the scheme or the shareholding of Snowy Hydro Ltd.

While Snowy Hydro owns the physical assets such as power stations and dams that comprise the Snowy scheme, it does not own the water it collects and releases from the scheme. The Snowy water licence, administered by the New South Wales government in accordance with its contractual obligations with other governments, gives the company the right to collect, divert, store and release water. In return for those rights, the Snowy water licence imposes on Snowy Hydro the obligation to release specified volumes of water into each of the Murray and Murrumbidgee rivers every year for the next 72 years. The licence also requires Snowy Hydro to make the environmental releases for the Snowy, Murray and other rivers agreed by the Australian, New South Wales and Victorian governments in the Snowy Water Inquiry Outcomes Implementation Deed for the corporatisation of the scheme in 2002.

The Australian government has explicitly acknowledged the importance to irrigators of clarity with respect to arrangements for the timing of water releases made from the Snowy scheme into the Murray-Darling Basin Commission storages and for appropriate consultation mechanisms for irrigators and the Murray-Darling Basin Commission. Snowy Hydro and the MDBC are currently in discussions regarding such release and timing issues. These issues are being pursued by the Australian government with the other shareholder governments and Snowy Hydro, having regard to the needs of irrigators and the scheme as a peak electricity generator.

To conclude, selling Snowy Hydro through this initial public offer will allow the company to reach its full potential as a responsible provider of clean energy and water flows for irrigators and the environment. I commend the motion to the House.

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