Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

The opposition supports the motion but will be moving an amendment, which I will make some references to in due course, that deals with some of the specific issues that are emerging from the proposed sale of the Commonwealth holding in Snowy Hydro. The motion before the House today relates to providing approval for the Commonwealth to proceed with its sale of its 13 per cent holding in Snowy Hydro, following the decisions by the New South Wales and Victorian governments to sell their respective holdings—58 per cent in the case of New South Wales, and 29 per cent in the case of Victoria.

The proposal raises a number of issues that need to be considered in the context of the decision to divest the Commonwealth’s 13 per cent holding. In particular, the issues that are important are, first, the need for some degree of recapitalisation of Snowy Hydro. It is now a very well-worn, long-life infrastructure asset that does require significant upgrading and reinvestment. Clearly there are constraints on the three governments that currently own Snowy Hydro submitting new capital for that purpose. Second, there are major concerns with respect to the future for environmental flows—it is an issue I want to spend some more time dealing with shortly—especially to the Snowy River itself. Third, there are the concerns of irrigators with respect to the volume of water that is being diverted into the Murrumbidgee and Murray systems, courtesy of the redirection of the Snowy which is integral to the whole scheme’s concept. Finally, of course, there is the future role of Snowy Hydro with respect to electricity generation.

As I indicated, Labor does support the motion before the House, but I will be moving the amendment standing in my name that deals with a number of points—some of the key issues associated with the prospects for the scheme post privatisation—that we seek further reassurance on. There are a number of key issues that have been top of mind for Labor in making its decision to support this motion because, I think it is fair to say, we do so with significant reservations. The fact that the Commonwealth’s holding is only 13 per cent and that the Victorian and New South Wales governments have made the decision to divest themselves of their holdings means in practice that, were the Commonwealth to retain its holding in Snowy Hydro, its ability to exert any influence over the decisions of the future privately owned Snowy Hydro would be negligible. Clearly, public ownership or partial public ownership requires some capacity to exert that ownership for broader public good, and it is difficult to see how the retention of 13 per cent of a major organisation like Snowy Hydro is going to give the Commonwealth much capacity at all to influence its decisions in any particular direction. So the level of the holding is a particularly important consideration in Labor’s view.

Second, it is important to note that there are a range of long-term, binding legal agreements with respect to Snowy Hydro’s use of water resources. These go for many decades in some cases and they will be unaffected by the change of ownership. We can of course speculate on what may occur in the future with respect to these agreements. There may be consensual changes that are derived from changing policies of governments and a privately owned Snowy Hydro. All sorts of things are possible, but equally such things could occur with Snowy Hydro remaining in public ownership. The true picture is that nobody knows what future governments and future companies will do in 20, 30 or 40 years time. We can only guess as to potential outcomes from such decisions in the future. But, as things stand, we have binding legal agreements and I certainly believe that they should be adhered to.

Third, it is also worth noting that Snowy Hydro does not own the water that it is making use of. It has licence arrangements with the New South Wales and Victorian governments that ensure that it has the right to use the water—as indeed many other private organisations have—and it does not exert property rights with respect to that water.

The amendment, which is about to be circulated in my name, requires that the government report to parliament in five years time on a range of key issues arising from the sale of the Commonwealth’s holding, including the impact on employment in the local area; the extent to which infrastructure of Snowy Hydro has been upgraded, as has been promised; the outcomes of environmental flows; and the water flows for irrigators. The amendment seeks to ensure that the commitments that have been made by the various governments with respect to the future on these central issues will be reported on to parliament in five years time.

I come from the one small part of Australia that does not regard the Snowy Mountains scheme as an Australian icon. The impact of the scheme on East Gippsland, where I come from, was to very substantially reduce the flow of the Snowy River to the significant detriment of both the environment and local farmers. The reduction in flow of course is particularly dramatic in the upper reaches of the river around the New South Wales-Victorian border in areas like Dalgety, but it has still been very substantial in the lower reaches of the Snowy River down to Orbost—where I grew up—and has typically removed close to half of the river’s flow even at that level, in spite of the fact that numerous tributaries flow into the river between the Snowy scheme and its entrance to the sea at Marlo.

Some years ago I was contacted by a former Labor member of the Victorian parliament after I had spoken in the House on the issue of the Snowy River and its future and had particularly raised the issue of increasing environmental flows—a cause which famously was taken up by the Independent member for Gippsland East, Craig Ingram, and was ultimately pursued by the Bracks government, to their great credit. This former member of the Victorian parliament told me that he had been a member of the Victorian parliamentary committee that had inquired into the Snowy scheme in, I think, the late forties or early fifties and that the only issue that they had considered when examining the prospective impact of the scheme on East Gippsland was the provision of drinking water for its very small population of about 5,000 people at that time. So, other than establishing that there was sufficient drinking water available from the Snowy, with its flows severely truncated, no consideration was given to any environmental impact and no consideration was even given to the impact on local farming communities.

It is good to see that the Bracks government, in agreement with the New South Wales government, is taking major steps to return environmental flows to the Snowy. Certainly, if I felt there was any serious risk of the privatisation of Snowy Hydro upsetting that arrangement then I would not be supporting this motion before the House today. I believe that the privatisation of Snowy Hydro will not alter significantly the risks in the future associated with the potential reduction of this agreement. I think those risks do exist, however ownership occurs, and they ultimately depend on decisions of future governments. The privatisation of Snowy Hydro will not materially alter those risks.

Some, understandably, see public ownership as a guarantee of protecting environmental flows into the future. I think that view is misconceived. On balance, it is slightly more likely that, if public ownership were to remain, the environment and the interests of environmental flows might be protected, but ultimately I think the difference is marginal. The issues at stake will be pretty much the same, irrespective of the ownership of Snowy Hydro. Ultimately, they will be decided by governments in response to public pressures.

It is important to note that there was not much protection of the environment when Snowy Hydro was under public ownership in the 1950s and 1960s. It is also important to note that one group that has been particularly vocal in opposing the privatisation of Snowy Hydro is of course the irrigators who rely on the water for their farming activities. In a sense, there are people on both sides of the debate who have claims with respect to the water. They are effectively conflicting claims: both sides fear that they will suffer in the future as a result of the sale of Snowy Hydro. In my view, the sale will almost certainly make no material difference to the future outcomes with respect to those competing claims. I may be proved wrong, but that is the assessment that I hold.

Finally, I briefly mention the question of privatisation more generally. One of the sad features of public debate in this country over the past 15 years or so is that debates about privatisation have tended to be arguments between one group of people who want to sell everything and another group of people who want to sell nothing. Therefore, they become arguments about dogma, removed from the merits of the case dealing with the particular organisation or entity that is involved. I think it is important when dealing with any proposal for privatisation to focus on the merits of the issue. What is the productive activity involved? What does the organisation do? Who wins, who loses? What is the purpose of public ownership and could that equity, that asset, be better deployed in other areas? For example, I did not oppose the Victorian government’s sale of the State Insurance Office 15 or 16 years ago because I felt that, although the state government had had a role in owning a major insurance company in earlier times, the nature of the insurance market had changed to a point where that was no longer necessary. There was no longer any particularly substantial social purpose in having a publicly owned general insurance company.

These issues need to be dealt with on their merits. We need to look at the issues that are involved in particular cases to determine whether or not retaining or indeed initiating public ownership, be it full or partial, is appropriate. In my judgment, the key issue for the Commonwealth in this instance is whether there is any merit in retaining 13 per cent of a major organisation, Snowy Hydro. In my assessment, that fact alone makes it relatively pointless to oppose the sale of the holding, because 13 per cent is simply not enough to allow the Commonwealth to influence the decisions of the organisation in any material way, and I think it is a very unlikely scenario that any government would commit to buying the current shares that are going to be put on sale by the New South Wales and Victorian governments.

It is also worth noting in passing that the Bracks government has undertaken to invest the proceeds of the sale of Snowy Hydro into upgrading the infrastructure of Victorian public schools. I applaud the Bracks government for so doing and I call on the Howard government to indicate how it intends to invest the proceeds of the sale of its 13 per cent holdings. Ultimately, the crucial question that we face on these issues is: what is the alternative use of the capital going to be? If the government is proposing to sell a particular asset then the key question is always going to be: what are the proceeds going to be invested in? In my view, it is an entirely appropriate thing for the Victorian government to increase its capital investment in education off the back of the sale of its interest in Snowy Hydro. I think that is a very positive thing. It reflects a shift in the relative priorities of government over the last 30 or 40 years where learning, education and the development of skills has become a much more important responsibility of governments than it was in previous times. The decision of the Bracks government reflects that change in priorities.

I believe that it is important that the government, in taking this decision, is not running away from a commitment to invest in infrastructure. It is not simply winding back a particular infrastructure investment, but it should be telling the parliament where the proceeds are going to be invested. In particular, it should be linking that to broader strategies to improve investment in infrastructure in Australia, be that economic infrastructure or broader infrastructure such as schools and hospitals. That is the question that has not yet been answered by the government. I would appreciate hearing their views on that. I move:

That the following words be added to the motion:

“(2) To ensure that Government claims about privatisation are met, the House, noting the Government’s claims that:

(a)

local employment will increase through the use of local specialist contractors;

(b)

the privatisation will lead to an innovative maintenance and upgrade program for the Snowy Scheme’s equipment and infrastructure and give the company the opportunity to grow its energy business and raise capital in the future; 

(c)

the privatisation will not affect water releases or water rights of downstream users in NSW, Victoria, or South Australia;

(d)

Snowy Hydro meets its obligation to release specified volumes of water into each of the Murray and the Murrumbidgee Rivers every year for the next 72 years; and

(e)

Snowy Hydro meets the environmental flows for the Snowy, Murray and other rivers agreed by the Australian, NSW and Victorian Governments in the Snowy Water Inquiry Outcomes Implementation Deed for the corporatisation of the Scheme in 2002;

requires that the performance and outcome of the share transfer and disposal are reported against the above claims to the House at the expiration of 5 years after the passage of this resolution”.

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