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

Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to 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”.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I formally second the amendment and reserve my right to speak.

Gary Nairn (Eden-Monaro, Liberal Party, Special Minister of State) Share this | Link to this | Hansard source

As a federal member of this House who represents a large part of the Snowy Mountains Scheme area, it is certainly important that I speak to this motion here today. This has really come about in the timing that it has because of the New South Wales Labor government’s quite quick decision, made towards the end of last year, to sell its majority shareholding in Snowy Hydro. It is worth emphasising that the New South Wales government currently owns 58 per cent of Snowy Hydro, so it alone, as a government, has a controlling interest in the ownership of Snowy Hydro.

I think there are many questions that could be asked and should be asked about the way in which the New South Wales government went about making that decision, and it is fairly clear that the reason that the rushed decision was made towards the end of last year is related to the New South Wales Labor government’s perilous budgetary situation. It needs the cash and it needs the cash fast. I think it is a shame that such an important issue as the privatisation of Snowy Hydro was accelerated to the forefront in the way that it was simply because the New South Wales Labor government cannot manage its budget.

But, having made that decision, and with the Victorian government subsequently deciding to sell its 29 per cent, it would have been irresponsible for the Commonwealth not to consider its position on the 13 per cent that it holds in Snowy Hydro. I agree with the member for Melbourne when he says that a 13 per cent shareholding in what would be a private company would not give the Commonwealth much power in decision making with that particular company. Consequently, the cabinet decided that the Commonwealth government’s 13 per cent holding would also be sold.

The corporatisation of Snowy Hydro took place in 2002, and this was an issue of great debate back then as well. In allowing that corporatisation to proceed, one issue that I ensured occurred at privatisation was the maintenance of the headquarters of Snowy Hydro in Cooma. It is obviously a key industry for the Snowy Mountains and particularly for Cooma, and many of the people of Cooma and the region have a great connection with Snowy Hydro.

That happened as part of the corporatisation. In fact the activity of Snowy Hydro in Cooma and the region has grown in that time. So when this came on the agenda I certainly ensured that all the issues related to the Snowy Hydro privatisation were considered in great detail. I have been working with my colleague Senator Nick Minchin in that respect. I got all the advice so that the New South Wales dash-for-cash would not be detrimental to the environment, existing water users or others who might be affected by this scheme.

One of the issues related thereto is the lakes. A number of the lakes in the Snowy scheme are in national parks; there is probably superficially more protection for those lakes, being wholly within national parks. However, there are two main lakes, Lake Jindabyne and Lake Eucumbene, which certainly have a use far beyond just storing water in a hydroelectricity generating sense. Those lakes are integral to tourism in the Snowy Mountains. I personally own a small shack on Lake Eucumbene, at Old Adaminaby, which my wife and I bought in 1981, and I have been a regular visitor to that since 1981. That is my real tie to the region and partly why I ultimately stood for election to this place as the member for Eden-Monaro.

Those two lakes are integral to the tourism industry in the region. Many people have come to me over the last couple of months about matters related to the ongoing operation of those lakes and access to them. A few weeks ago I attended a meeting of the Eucumbene Chamber of Commerce in Adaminaby, and many of the people who own businesses in the region and who certainly rely very heavily on having those lakes for their businesses were at that meeting. They raised a variety of issues with respect to the level of the water in the lakes and their environmental flows, and particularly with respect to access and use of the lakes.

These lakes are great fishing locations, particularly Lake Eucumbene, which has been much better from a trout fishing point of view over the last few years than in some time. So they are great recreational lakes for boating and fishing—Lake Jindabyne particularly for waterskiing—and other activities. I wanted to ensure that there would not be any change in that recreational use with the change of ownership, so I worked very closely with Senator Minchin on this issue, and I thank him for his active interest when it seemed that the state Labor government had just washed its hands of some of those concerns. Things sort of happened without the issues really being gone through closely.

Advice has now been received that the use of the lakes is governed by the state government, which actually owns the water. Snowy Hydro does not own and will never own the water in the lakes. They have title to the land under the lakes but not the water. So the New South Wales state government does have legislative arrangements to regulate and look after that aspect of the lakes. The advice is that this arrangement will continue after the privatisation of Snowy Hydro, ensuring that boating and fishing activities will remain under the regulation of the state government and not a private company.

I have to say that the New South Wales local Labor member, Steve Whan, has been pretty ineffectual in raising and addressing these particular concerns of the local people with his government. In fact his own government’s cabinet made this decision without even telling him. They did not even tell the local member, so you have to ask what sort of influence he has in his own government. That was of great concern to people and why people came to me to say, ‘We want to be sure that the use of this lake is not going to change.’ Mr Whan seems to have done nothing to give comfort to people, but I have worked very closely with Senator Minchin and his advisers to ensure that we have this information, which, in speaking to this motion today, I can impart to my constituents, residents, tourists and visitors to the region. What we can say is that the use of the lakes is a New South Wales government responsibility. It falls at their feet now to ensure that the existing use rights enjoyed by local residents do continue, as they are, into the future. I call on the Premier and the New South Wales government to give my constituents that guarantee.

I will conclude by commenting on the amendment put forward by the member for Melbourne. The government will support this amendment. We do not have a problem at all with the amendment, because in the amendment are matters that we believe in very strongly, such as Snowy Hydro meeting the environmental flows of the Snowy, the Murray and other rivers, and we strongly support reporting back to the House five years from the passage of this motion on the performance and outcome of the share transfer and disposal with respect to this sale.

There is another matter that I will quickly mention. The member for Melbourne talked about the Victorian government putting their money into schools. Comments like this are really grandstanding and politicking, because at the end of the day how does a government identify particular money gained from a particular sale for a particular expenditure? The state Labor member for Monaro was running around making similar sorts of comments. His own cabinet did not even tell him that they were going to sell their share. He said that he was against it, that he was going to fight—but he was not prepared to cross the floor over it in the New South Wales parliament, I might add—and that he was going to make sure that money from the sale would go back into the region. I predict that from now until the New South Wales election in March 2007 he will claim that every single cent of New South Wales expenditure in his electorate is money that he got out of the sale of Snowy Hydro—which is just a farce. The proof of people’s representations is what they do across the board, not stunts like saying, ‘Yes, we’ll take some of that money and put it back in.’ We have been putting increased funding into major projects and major areas like education, health and transport, and I will ensure that continues and that my electorate is well serviced in that regard. But I reject these stunts about particular money going in certain directions. As anybody running government knows, income goes into Treasury and then government makes decisions about where money will be allocated, and you cannot trace it dollar by dollar from one project to the next. As I said, the government will support the amendment moved by the member for Melbourne, and I commend the motion to the House.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

Like many members on both sides of this House, I rise to speak on this debate in the parliament with a very heavy heart. There was no proposal on either side of this House to actually sell Snowy Hydro Ltd. I say that because I actually think the Snowy is an Australian and international icon. It is not only a very broad statement of our success in building big projects, huge engineering feats, but also a domestic and international statement about the success of postwar migration to Australia and the success of multiculturalism. In that context, I say on behalf of the opposition that we appreciate the government accepting our amendment to the motion before us. The amendment was proposed in good faith to try to ensure that the three governments involved in the privatisation actually fulfil their responsibilities with respect to the future use of the Snowy Mountains Hydro-Electric Scheme.

I say that because I think this scheme is exceptionally important—and how could anyone suggest otherwise? With 16 major dams, seven power stations, a pumping station and 225 kilometres of tunnels, pipelines and aqueducts, the Snowy Mountains Hydro-Electric Scheme is by far the greatest engineering project every undertaken in Australia and one of the biggest and most complex hydroelectric schemes in the world. Only two per cent of the entire construction is visible above the ground. The entire scheme covers a mountainous area of approximately 5.124 square kilometres in southern New South Wales. The scheme’s construction was a defining point and a defining moment in Australian history. It was an important symbol of Australia’s identity as an independent, multicultural and resourceful country as we went through postwar reconstruction and actually made a strategic investment in our nation’s future. It is therefore worth reminding the House of the fascinating history of the scheme, because it is a remarkable statement about the Australian character and why it is important that privatisation comes with accountability to properly maintain, upgrade and grow the Snowy Hydro energy business.

As I said at the outset, the Snowy Hydro has a very special place in the hearts of all Australians. Construction started on the scheme on 17 October 1949, when the Governor-General, Sir William McKell, Prime Minister Ben Chifley and William Hudson fired the first blast at Adaminaby. At the launch of the project, Ben Chifley, the Australian Labor Party leader, presented it as a national milestone. In the mind of the government of the day, it was important for the drought relief it was thought it would bring to inland Australia, for the power it would supply and for the ambitious size of the project.

Construction was completed in 1974, for a total historical cost, funded by Commonwealth government advances, of $820 million. Because the project was so much bigger and more complex than anything that had ever been done before in Australia, the engineers needed to develop methods that were new to Australia and the world. Safer and cheaper construction techniques were used and the project set new standards in occupational health and safety for the time. It also represented a major advance in how we undertook projects in remote areas of Australia. The power stations adopted higher outputs of electricity transmission than ever before. The project used Australia’s first transistorised computer, which was also one of the first in the world. Called Snowcom, the computer was used from 1960 to 1967, contributing greatly to the efficient and successful completion of this major project. The construction effort itself is actually hard to comprehend today when you think about the difficulties we have getting up infrastructure investment in Australia in the 21st century.

What a huge undertaking it was, given the size of the workforce. More than 100,000 people from over 30 countries came to the mountains to work on the project. Up to 7,300 workers would provide their labour at any one time. Importantly, 70 per cent of all the workers were migrants. Many of these came from war-torn Europe. They came to Australia to work on the project, attracted by a new opportunity in life and by what were then considered to be the relatively high wages offered on the job. We should not forget that at that time work was hard to come by in war-torn Europe.

Most of the workers were men who had left their families at home in Europe. Their plan was to work hard, create a new opportunity in a new country, save their money and bring their families out when they could afford to. The work was hard and the conditions were tough. Because 98 per cent of the project was underground, there was a lot of tunnelling, often through solid granite rock. Work in the tunnels was dirty, wet, noisy, smelly and sometimes exceptionally dangerous. Lives were lost on this project and some workers were maimed for life. More than 120 workers died in the project’s 25-year period. That just shows what a huge project it was and, despite the advances in health and safety on the project, how dangerous the job was.

Living conditions were also exceptionally tough. People lived in camps, and towns were built in the mountains to house the workers and their families. Often these dwellings were not suited to the freezing conditions of the Snowy. They were cold and the water would freeze in the pipes. When the workers’ wives and families came to join them in the townships, the women found it hard to find work, hard to overcome the hardships and the loneliness of being away from their home country and hard to establish communities in the strange, new wilderness of this outback environment of Australia. When work was completed in one area, the dwellings were dismantled and moved to another area—so very little remains of these towns today.

Exceptionally important for Australia was that the majority of these workers and their families remained in Australia after the project. They then went on to make many valuable contributions to Australia’s multicultural society and to the Australian construction industry, especially public works in places such as Sydney and Melbourne and in regional Australia.

The project was built in Australia’s national interest, with the support of the New South Wales, Victorian, South Australian and Commonwealth governments. The scheme today provides electricity to the national electricity market and much needed drought security to Australia’s dry inland.

In terms of its history, on 7 July 1949, the Commonwealth passed the Snowy Mountains Hydro-electric Power Act 1949. This established the Snowy Mountains Hydro-electric Authority, the operating body of the Snowy Mountains Scheme. In 1997—the world moves on—a new company, Snowy Hydro Trading Pty Ltd, was established by the New South Wales government and the State Electricity Commission of Victoria, as a joint venture to trade electricity generated by the Snowy Mountains Scheme in the new national electricity market. The Commonwealth then formally joined the Snowy Mountains trading company as a shareholder in February 2000—hence the debate today. The two companies were merged and corporatised to become Snowy Hydro Ltd in 2002.

The opposition supports the motion proposed, with the amendment now accepted by the government, but it has done so with some regret. Also, we thought there was inadequate time given for our caucus to consider this complex bill. We were advised of the proposition on Monday evening, we debated it at short notice in our caucus on Tuesday and, on the basis of the government’s timetable, the debate in the House is to be completed today. However, at least the outcome reflects the concerns of the caucus, as expressed in the terms of the amendment accepted by the government.

Having said that, I acknowledge that it is the desire of all the shareholders to privatise the company, albeit at the request and pressure of the New South Wales government. Their collective view that it will be in the interests of all Australian taxpayers and consistent with energy market reform is supported by both sides of the House. But it is important, as proposed in the amendment moved by the member for Melbourne, seconded by me and now accepted by the government, that the people of Australia have very clear assurances that the claims made by the governments—the joint governments: New South Wales, Victorian and Commonwealth governments—about privatisation are met. It is a collective responsibility.

The New South Wales government forced this privatisation, which was initially opposed by the Victorian and the Australian governments. I say, as did the member for Eden-Monaro, that a heavier responsibility rests on the shoulders of the New South Wales government than on any of the other governments involved in this decision, to guarantee that the undertakings and commitments sought in the amendment moved by the opposition are fulfilled. That is exceptionally important, because it is about this parliament acting in good faith. It is about this parliament saying to the Australian community that, when we make decisions, we are going to fulfil the full requirements and undertakings related to that decision.

The opposition want to be sure, in particular, that there is a guaranteed commitment to local employment for the scheme and, further, that privatisation does lead to the continuing maintenance and upgrading of the scheme and the growth of its business. That is the basis of the argument by the New South Wales government. They want us to believe that it is not a fire sale but an opportunity to grow the business. We are going to test their statements, which led to the decision to privatise the Snowy Mountain hydro-electricity scheme. If they say it is not a fire sale then they had better fulfil their commitments, which are now accepted by the Australian and Victorian governments.

We also want to make sure that the advances made in recent years in restoring the environmental flows of the Snowy continue to proceed. This was largely initiated by the Victorian Premier, in association with the New South Wales Premier, and eventually with the support of the Australian government. They have a collective responsibility to the environment of the Snowy by delivering on their legally binding commitments to water flows.

In conclusion, I want to say in response to the remarks made by the member for Eden-Monaro that the Victorian government was dragged to the altar with respect to this privatisation. They have stated to the Victorian community that the proceeds from the sale—which can be clearly identified; there will be a certain amount of money—will be spent on upgrading schools infrastructure in Victoria. That is a one-off opportunity, as a result of the decision made the Victorian Labor government, to renew some of the infrastructure of schools built in the 1950s. That is the case with a lot of our infrastructure around Australia. We have to renew that infrastructure as an investment in the education of our young for the future.

I acknowledge the decision of the Victorian government to actually do something constructive. The Snowy scheme represents the savings of many Australians. It was the biggest scheme undertaken to that date; in relative terms today a substantial scheme in the nature of Australia, be it at a state or a Commonwealth government level. The Victorian government have done the right thing and they are to be congratulated. In view of those matters, I simply say that I support the motion before the House, including the amendment moved by the opposition. This will hopefully guarantee the performance and outcome of the sale to be reported at the end of five years after the passage of the privatisation resolution. I commend the motion, as amended by the opposition, to the House.

Carmen Lawrence (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I want to speak very briefly on this motion to make a couple of points that I think deserve some attention. The decision by the New South Wales state government and, indeed, the form in which this decision comes before the House are totally inadequate for such a substantial change in policy. There has been no provision for proper debate. I do not hold the Commonwealth government necessarily solely responsible for that but this parliament should take more care over such an important decision.

We should be in a position to properly canvass the economic case and to check and test the alleged benefits and costs associated with the sale of the corporation. We should be able to explore the possible consequences for environmental flows in the Snowy in particular and for the health of the Murray River, which I know is vital to the consideration of a great many members in this House. What will be the consequences? How will it be affected by this privatisation? We should, in the debate, be in a position to clarify the position of irrigators who are reliant on water flows from the dams. We should discuss the use to which the state and the Commonwealth proceeds will be put. It should be in the form of a piece of legislation which we can examine. Finally, we should be in a position as a parliament to prescribe the community service obligations for what is indeed a complex, public utility.

When Vin Good, the former commissioner for Snowy Hydro, expresses reservations about this sale—and he is no opponent of privatisation—we should pay proper heed, for example, to questions like the one he raised in a recent radio interview. He made the proposition that while Snowy Hydro does not own the water—that is owned by the state—the argument is that as a private company perhaps it should pay for its use, as is the case with some other hydroelectricity schemes. That is one of many questions that we should be properly able to analyse in this parliament.

Ideally, with such a major decision, we should be able to test the claims in advance and not rely, as we are having to, on an amendment to test the claims after the deed is done. We should have been able to look at expert advice and carefully study the various propositions, including the economic case. The sad reality is that the New South Wales government has made a budget not an economic case. Part of the problem is that the New South Wales government, like other governments, including the federal government, has been refusing the necessary capital injection because it has become ridiculously debt averse. We have seen a decline in the quality and quantity of infrastructure around Australia as a result.

The sale of such a major public asset actually requires much more careful consideration particularly in the light of some fairly spectacular failures of privatisation, especially in the electricity market as people in Victoria and South Australia will bear witness. It is not unreasonable to require governments to justify the sale of publicly held assets, firstly to examine the loss of the revenue stream and the loss of control. How will they be able to influence outcomes into the future? Governments must also examine possible market distortion with such a big player depending on the ownership structures that emerge and we have had no discussion of those ownership structures. What sort of sale will it be? There is a very real question around future compensation payments. Whose responsibility will they be? The current CEO says it will cost hundreds of millions more in compensation to reach the 28 per cent environmental flows that are agreed but not yet achieved. Then there is the nature of the sale itself. Should there be maximum shareholdings and controls on foreign ownership, for example?

I think it is very clear that the sale was provoked not by careful assessment of the case but by the actions of a cash strapped New South Wales government. That is not a very good reason for undertaking a sale, especially, as I say, given recent experiences with private operators in New South Wales, particularly in the transport industry. I would have thought it was cause for caution, given the catastrophe that is the cross-city tunnel for example. We should pause before we sell a national icon—100,000 workers toiled for 25 years to construct it, as we heard from the previous speaker. There have been economic benefits from Snowy Hydro but there have been huge environmental costs as well. There is a debt which is far from being repaid.

We understand that the sale is expected to raise $3 billion to be divided according to the shareholdings of the states and the Commonwealth. That is a lot of money and much of it, as we understand, will go to schools and hospitals in New South Wales and Victoria. The Commonwealth apparently proposes to use it to place in the Future Fund to cover the superannuation liabilities for public servants. I ask the question, as a former state Treasurer, and as the member for Eden-Monaro also speculated, about whether that really would be extra money going to schools and hospitals or whether the states would simply replace existing sources.

The long-term problem is that we have recent agreements on improving environmental flows, particularly in the Snowy, firstly to restore up to 21 per cent then finally up to 28 per cent. Some of the money must be set aside to enable it to happen. To go beyond 21 per cent will require hundreds of millions of dollars in compensation to both irrigators and Snowy Hydro. We should be assured that that has been planned for. But there is no indication in this notice of the mechanisms which will enforce compliance with the higher rate. Allowance obviously does have to be made in those sale proceeds. Significant funds should be put towards repairing the Snowy and the Murray, which we all know has serious problems, especially given drying climate conditions. I have to say, just as a footnote, that everybody understands that the electricity market into which this will feed is far from satisfactory in its operations, and those questions have not been addressed in this motion. In conclusion, because I did only want to be brief, I think this raises a great many questions about the procedures of this parliament and I am deeply worried we have not properly considered this matter.

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

The Snowy Mountains Scheme is indeed one of Australia’s great iconic infrastructure projects. It consists of seven power stations, 16 major dams, 145 kilometres of interconnected tunnels and 80 kilometres of aqueducts. The scheme is acknowledged to be one of the civil engineering wonders of the modern world. It took 25 years to build and made an important contribution to building multicultural Australia. More than 100,000 people came from over 30 countries, bringing with them their commitment to building a new life for themselves and their families in Australia in the postwar period.

The scheme also has a number of benefits. It provides renewable clean energy and related products. It supplies water for irrigation and for agricultural production. Snowy Hydro Ltd is the chief provider of peak renewable electricity to the national market. At the moment it provides some 3,756 megawatts. It is important, in the context of climate change and the need to expand the renewable energy industry in Australia, to acknowledge that the scheme prevents some 4½ million tonnes of carbon dioxide from being released each year. That is the equivalent of the exhaust of a million cars. So it is not surprising that Snowy Hydro is an integral player in the mandatory renewable energy target program —a program that is effectively due to cease because of the failure of the government to take seriously the need to expand renewable energy in a carbon constrained world. Indeed, that mandatory renewable energy target of two per cent is pathetic. Its collapse is due to a failure of leadership not only on the environment but also on industry and securing future economic growth. Snowy Hydro is also a participant in the national Greenhouse Challenge Program and the National Green Power Accreditation Program and it will be a part of a state based emissions trading scheme to be introduced by the states, once again, in the absence of national leadership.

However, it is also important to acknowledge that there was a negative result of the Snowy Mountains Scheme. That came about by the diversion of water from the Snowy and downstream from the Murray, Murrumbidgee and other systems. Australia used to have a view, as the world did, that you could just divert rivers, construct dams and it did not have an impact in the long term. We have moved to more enlightened times where it is acknowledged that that is not the case. Hence, in recent times governments have got together to ensure that environmental flows are returned to the Snowy and alpine rivers and the Upper Murrumbidgee and Murray rivers in line with government commitments. My main concern with the privatisation of Snowy Hydro is to ensure that those commitments are not endangered. Therefore, I am very pleased to support the amendment moved today by my colleague the shadow minister for finance, the member for Melbourne. I am pleased that the government has accepted that amendment to the motion before the House.

The amendment goes to a number of issues. It seeks to ensure firstly, that local employment will be increased; secondly, that privatisation will lead to innovative maintenance of the Snowy scheme equipment and infrastructure; thirdly, that privatisation will not affect water releases or water rights of downstream users in New South Wales, Victoria or South Australia; fourthly, that obligations to release specified volumes of water into each of the Murray and Murrumbidgee rivers every year for the next 72 years are kept; fifthly, that Snowy Hydro meets the environmental flows for the Snowy, Murray and other rivers agreed by the New South Wales, Victorian and Australian governments in the Snowy Water Inquiry Outcomes Implementation Deed for the corporatisation of the scheme in 2002; and, finally, there will be a report back in five years time on the consequences of the passage of this legislation.

The Snowy River environmental flows were part of this significant agreement. Originally the agreement was that flows for the Snowy River must reach at least 21 per cent of natural flows by 2012. It is a sad reflection perhaps that there had to be an agreement between two states and the Commonwealth government that the flows of this magnificent natural river had to reach 21 per cent. However, that was the case. I note that, as part of the agreement, the Commonwealth committed $75 million. Once again, it was state Labor governments providing that national leadership, with both Victoria and New South Wales committing $150 million each to the project. Some progress has been made—10 gigalitres into the Snowy River since corporatisation in June 2002 and 19 gigalitres into the Murray River. There is some ongoing concern about the environmental impact of privatisation. My colleague the member for Fremantle outlined some philosophical views on privatisation with which I would concur.

The reason public ownership can be important is that it guarantees that governments can directly intervene given changed circumstances. When we look at environmental flows in rivers and at water in general, we need to acknowledge that climate change will mean we will face a very different Australia in 10, 20 and 30 years. According to the government’s own report Climate change: risk and vulnerability, which was received by the government in June last year, we can anticipate a 30 per cent loss in rainfall and a further 30 per cent loss in run-off in southern Australia. So I put on record my concern that agreements made today need to ensure that they deal with the tomorrows we face as a result of climate change. Against that, it must of course be acknowledged that Snowy Hydro does not actually own the water and never has. This legislation will not change that. Snowy Hydro owns the assets only, and therefore environmental allocations will not be affected by the privatisation of Snowy Hydro.

I also note there are a number of legally binding agreements which ensure that environmental flows are protected. These include the Snowy Water Inquiry Outcomes Implementation Deed, the Snowy water licence and the annual water operating plan. None of these agreements are affected by the legislation before the House today and by the privatisation of the asset by New South Wales, Victoria and the Commonwealth.

I am very pleased that the amendment moved by the member for Melbourne has been accepted by the government. Once again, it has been up to the Australian Labor Party to be diligent and to make sure that the important national interest that the environmental flows in the Snowy River and other river systems represent is protected. I commend the amendment to the House.

Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Link to this | Hansard source

I rise to support the amendment and the remarks of my colleagues the member for Grayndler and the member for Fremantle. People listening, particularly in country New South Wales and country Victoria, would be a little astonished by the contribution that has been made, particularly by the government, on this very important issue as we discuss the corporatisation of Snowy Hydro and now its privatisation. The reasons for that would be evident upon reflection. The member for Batman, in his remarks, pointed out the significance of the construction of the Snowy Hydro. It not only provided water for the Murray-Darling Basin but additionally provided secure employment for a significant number of postwar immigrants to Australia and, more generally, contributed to the sense that, following the end of World War II, Australia was capable of taking on an engineering task of this size and magnitude and doing it successfully.

I want to raise some concerns I have about the imminent privatisation and make further comments in relation to specifically what is proposed. It has to be said that, whilst it took a quarter of a century to build, it was a world-recognised engineering achievement, it created great wealth and the water it provided for irrigation sustained a farming community, Snowy Hydro also had some significant environmental disadvantages. Most notably, there was the ultimate state of the Snowy River itself, a river that is steeped in the folklore of Australia. The poem The Man from Snowy River is well known by all of us, yet, towards the end of the 1990s, we had a situation where the river was in very deep trouble. Flows were down to about one per cent and it was clear, from the public clamour to restore that river to health, that something had to happen.

The Snowy hydro scheme is simple in one respect but complex in another. It harvests water from the Snowy Mountains. The water goes west, under the mountains, to the Murrumbidgee and Murray rivers for irrigation and generates electricity as it drops down onto the plain. There are some 16 large dams and 220 kilometres of tunnels, pipelines and aqueduct. We saw on the Movietone News the sight of workers toiling in Cooma and Jindabyne to produce the engineering marvel.

But the drip release of water into the Snowy River itself meant that pressure was inevitably going to be put on the governments that owned the scheme to produce water for environmental flows. The set of negotiations between state governments, the federal government, conservationists and river users, particularly in the Snowy River region in Victoria, which emerged from the commissioning of an extremely in-depth environmental impact statement, meant that eventually, following various scientific studies, there was a recommendation of a return of 21 per cent of natural water flows back to the top of the Snowy River and additionally a commitment for efficiency restructures for irrigation and channelling and a further seven per cent flow to get to the required scientifically identified level of 28 per cent.

On 29 August 2002, the corporatisation took place and the release of water into the Snowy River happened. As the then President of the ACF, I was proud to be there with Premier Bracks and Premier Carr on the occasion of the release of that water.

But I want to draw to the attention of the House some of my great concerns about the subsequent actions of Snowy Hydro, particularly in relation to the on-selling of the agreements that exist within the privatisation, which I think this House and particularly the major shareholders—the New South Wales government and the Victorian government—should be mindful of. In effect, Snowy Hydro went from providing water for irrigation and generating power to trading in water and energy. The agreement to return environmental flows to the Snowy was made, but two issues arise when we consider what happens next. And I think it will be instructive for the House to hear that story in some detail.

Members of the public, conservationists, river users, irrigators, farming communities and others, including me, were firmly of the view that the wording of the agreement, the public announcements and the press releases provided for the Mowamba aqueduct to effectively be decommissioned so that there would be a release of environmental flows into the Snowy River and that these would occur as natural flows. Instead, relying on a technical interpretation of the agreement, after the first release of water from the Mowamba, subsequent flows of water from the Mowamba were redirected back into Jindabyne and the second release of water back into the river system came from Jindabyne and the dam.

I have to say clearly that this was definitely in breach of the spirit of the agreement signed by the governments. On Tuesday night I took leave from the House to speak in Berridale. Every single person who approached me about this issue was wondering why there is not a vigorous debate about it in the parliament and drew my attention to the fact that the spirit of the agreement had been breached and that there was not in fact the provision of environmental flows into the Snowy River as the public had been led to believe.

The argument that comes back is: the amount of water being provided goes back into the Snowy, so what is the concern? I will explain the concern in these terms: the Snowy River was a healthy organism, a river system with its health derived from annual river flows and the variability of weather events, a dry season followed by spring or summer rains, and it is that process—the natural flows and the pulse rates of the river—that generates river health that increases biodiversity.

If you do not have that, if you only supply water when it suits you from the bottom of a dam—or the top of a dam if there is an overflow—you do not replicate as closely as you would otherwise the natural pulse, variabilities and flows of water into the river system. That is very clearly a breach of the public’s understanding of what was going to take place following the corporatisation and of the commitment by the Commonwealth, but more particularly by the New South Wales and Victorian governments, to expend that money into the river system. I think that is an issue that we should not lose sight of. When the Victorian, New South Wales and Commonwealth governments come to sign off on privatisation, extremely careful scrutiny must be made of the actual terms of the existing agreement—in particular, the way in which they might be technically read so as to subvert their total meaning.

An additional question arises as to what happens in the future when we reach the situation stipulated in the agreement about above minimum flows. Minimum flows are locked into the agreement for 72 years, but if there is excess water in a season then there is a question as to when, how and who gets that water. The dollar pressure to hold onto water, to release it for energy or to hold on to it for irrigation in drought at a later time, as opposed to providing for it as a release to make up between the 21 per cent and 28 per cent for environmental flows, will definitely raise its head.

I draw the attention of the House to comments made by the member for Grayndler. He said that climate change creates a very different Australia. The fact of the matter is that rates of evaporation out of our river systems were the highest ever in 2002—the year this corporatisation agreement was signed. But the projections from the CSIRO and other authorities about the likely impacts of climate change mean that the impact on the Snowy Hydro, on allocations, on existing storages and on river health—into the Snowy where we need environmental flows and through the Murray where we need both environmental flows and an adequate provision of water for irrigators—will become the most important issue, and management issue, that a privatised Snowy Hydro will have to face. I say very strongly to the premiers of Victoria and New South Wales and also to the federal government that it is critical that this issue be factored in as an additional component to any agreement that is finally reached on privatisation—additional to the existing agreements that led to corporatisation. It seems to me to be as important as other issues that have been raised by the member for Fremantle and others. This is the critical issue.

The reason for that is that all the figures that exist within the corporatisation agreement are based on an EIS that was undertaken in the 1990s, which had at that point in time sufficient and available data as was known. In the six years since that time, we have learned a great deal more about the likely impacts of climate change. There is a great deal more economic research and there is a much higher responsibility for governments, as there is for corporations and individuals, to adopt a precautionary principle on something as critical as water. I tell you: for those communities in the Murray-Darling Basin and down the Snowy, the provision of water will be the most critical thing of all.

I will confine my remarks to saying that it is these issues that need consideration. I note that it is considered that the privatisation should take place some time in June or July. It seems to me that that is an exceedingly hasty time frame to determine a privatisation of this scale. I also understand that there are additional agreements and negotiations being undertaken between state and federal governments and the privatisation entities. I think that this parliament and the parliaments of Victoria and New South Wales are entitled to know what they are so that we can have a full debate about them. At the very least, in supporting this amendment, and recognising that we have been able to raise these issues in the House, I hope that the full context of the remarks that I have made on this upcoming privatisation can be noted.

Peter Andren (Calare, Independent) Share this | Link to this | Hansard source

I must say that this debate on the Snowy Hydro caught me somewhat by surprise, having expected a full and thorough inquiry and a piece of legislation to effect privatisation of these publicly built assets which, as many other speakers have said, are iconic in the Australian history. They have the rich history of postwar immigration and the role of showing that Australia had the will and the expertise to create a water delivery process of such immense value to this nation. As we all know, water can be a huge asset but also can create enormous difficulties. The control of that flow of water, irrespective of the electricity it has generated over those years, has created a situation now along the Murray-Darling where we are confronted with a crisis of environmental proportions that few continents on this planet have seen.

I well remember the debate over the full privatisation of Telstra in this place about a decade ago. The then shadow minister for the environment, Mr McLachlan, and I had a chat in this chamber after that debate, in which I had said that the 2001 program for the restoration of the Murray-Darling was in fact a 2101 project, so vast were the challenges facing us. Mr McLachlan agreed fully that it was a 100-year program and that the $1 billion then being set aside for the environmental program was but a drop in a very deep well.

The proposed divestment of public ownership of the Snowy Mountains Hydro-Electric Scheme means that the public will lose control of that asset. It shows a lack of commitment to the long-term difficulties of that river system. While I understand now that section 7 of the 1997 bill provided for the Commonwealth only to require approval of parliament through a process like this, I think most Australians would have expected a full and proper debate, publication of that debate and a full inquiry into the ramifications of the privatisation process. The Labor and coalition parties have combined here to accede to the wishes of the Victorian and New South Wales governments and, as the previous speaker, the member for Kingsford Smith, said, with no proper provision for the sorts of flows into the Snowy River in particular as had previously been agreed. My Independent colleague in the Victorian parliament, Craig Ingram, has severely criticised the position of the New South Wales government to go it alone and totally sell its 58 per cent share of Snowy Hydro. He says:

The NSW decision to totally dispose of its shareholding in Snowy Hydro undermines the two other shareholders (Victoria and the Commonwealth), the security of irrigator entitlements and future needs of the environment ...

The Snowy corporatisation agreements lock the delivery of water in for the next century and any changes during that time to the needs of the irrigation industry or environmental flows would be almost impossible under a privatised Snowy Hydro.

As Mr Ingram clearly points out:

Does the NSW government believe that there will not be any need for adjustments in the irrigation industry or the environmental flows in the next 100 years?

He and others describe this as a ‘blatant grab for cash’. We all know that the New South Wales government is severely strapped for cash. God only knows why and how, given the flow of GST funding. Despite the claims it is not getting its fair share, what is New South Wales doing with its resources when it is leading the charge to privatise one of the key pieces of public infrastructure? The continued control of the Snowy system by the governments of this country, I believe, is absolutely essential to maintaining our impetus to ensure the environmental outcomes that are so desperately needed along the river system.

The Snowy is part of the nation’s building infrastructure, as Mr Ingram said. It was built with taxpayers’ dollars, without addressing the security of environmental flows at the time. I would suggest that this parliament should have adopted the very reasonable suggestion made in the other place by the Leader of the Australian Democrats, Senator Allison, that at the very least this issue should go to a full and public inquiry before these steps are taken. It has been written here, there and everywhere that the Victorian, New South Wales and federal governments are the owners of the Snowy system, but they are the protectors, the guardians, of this public investment. As with telecommunications, I would argue, as do the majority of the public, that these assets are of such importance and of such environmental significance that it is not for the government of any three-year cycle to dare to suggest that it is theirs to flog off.

No doubt the 19.8 per cent return on investment that the Snowy delivers is the reason for selling it, and what an attractive pie it will be to the private sector. What commitment will they have to the environmental consequences of the process? Whatever steps we put in place to protect the environment, there is absolutely no certainty that the guarantees we are seeking, as reflected in the amendment from the opposition—that local employment will increase through use of local specialist contractors, that it will lead to innovative maintenance and upgrade programs, that it will not affect water releases or water rights downstream—will eventuate. I suggest the only way to ensure that outcome would be the continued public administration and ownership of the very infrastructure which is required to deliver it. Reading through some of the contributions to the debate in the other place, I see that the Australian Conservation Foundation have reported that the percentage of stressed and dying red gums along 1,000 kilometres of the Murray has increased from 51 per cent to 75 per cent over the last 18 months to the end of last year, an increase of nearly 50 per cent.

I do not have to recount chapter and verse the crisis of the Murray-Darling river system—we all know how stressed and distressing that situation is—but the public would at least like the right, through their parliament and through a properly set up inquiry process, to put their views. The previous speaker referred to a meeting this week where the concerns of people living along the river system, particularly the Snowy River, were canvassed. They are certainly not convinced that the provision for the inflows that have been promised will in any way be guaranteed with the full privatisation of Snowy Hydro.

Through its amendment the opposition wants guarantees of the government’s claims that the privatisation will not affect water releases, that Snowy Hydro will meet 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 that Snowy Hydro will meet the environmental flows for the Snowy, Murray and other rivers. They are very admirable aims, but I suggest that issues like Cubbie Station and the lack of overall national responsibility for water storage, and our water policy generally, are part and parcel of the whole problem that we face here.

At the weekend I was talking to a landowner from the Barwon-Darling region, whose income and opportunities have been severely restricted by the situation at Cubbie Station with the harnessing of water. With the Murray-Darling we have what should be a national river system under national supervision because the states have shown they do not have the foresight to properly supervise those assets in the national interest. So what do we do? We meekly accede to the wishes of a cash-strapped government to flog off this asset for short-term political and financial gain, so they think. The long-term interests of our river system—the water delivery and the environment—are left as somebody else’s problem down the track. At the very least this process needs a proper and full parliamentary inquiry. That is the very least the public would expect in their infinite wisdom of these things.

Once again, the major parties in this place have combined to surrender the assets of this nation that were built on the blood, sweat and tears of generations past. I find it absolutely outrageous—I do not find it amazing; I have come to expect that sort of thing in this place—that here we have a collusion of the major parties to rid us of this national asset. Whatever the well-meaning intent of the opposition’s amendment to the motion, it guarantees absolutely nothing. What we will be guaranteeing is the slow death of the Murray-Darling system once the control of that water is fully privatised.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

It is with great regret that I stand to speak on this motion, which allows for the sale of the remaining portion of Snowy Hydro Ltd, an asset held dear by many Australians. From the surprisingly large number of people who have called my office in the last month begging that this asset not be sold, I know how many people will grieve for the loss of an asset which very much forms part of our identity as a nation. The Snowy Mountains hydro-electric system was built by people able to solve problems—people who did the hard things with great courage when they were necessary. It remains one of the great civil engineering achievements of the world.

A nation is not just made up of a group of individuals. We are bound together by the things that we share—the experiences we share over the days and weeks that pass, our sense of ourselves, our character, our history and the perceptions that we share of each other. Just as friendships grow over time into the future because of the things we share in the past and the things we do together today, so does a nation. The achievements that we honour also bind us together, and the development of the Snowy Mountains scheme is a part of that. Our experiences as a nation are as essential for our prosperity as our individual experiences.

Today we are agreeing to sell an important element of our national character. This action warrants very serious, lengthy debate. Unfortunately, of course, today we see a motion being put with unseemly haste. The opposition were advised of this on Monday night; we debate and vote on it today without the time for our communities or this House to debate it seriously or for stakeholders to make their case. This is incredible haste over what is a very important part of our national identity. This is not just an economic issue; this is not just about the money. This is also about allowing people to come to terms with and debate what is a very serious matter for a great many Australians.

It is particularly serious because many Australians do not share the belief of the supremacy of privatisation. There is considerable disagreement in the community and in this parliament about the notion that private is always better than public. There are many economists and businesspeople who question the validity of that and who believe that, at times, private is not necessarily better than public—that there are times when public ownership is unbelievably important.

Again, this is a debate we should be having. Tough decisions are not necessarily those that are made without regard for the views of others; strong decisions allow for debate, strong decisions allow for the views of others to be incorporated and a strong government would do the same. What we are seeing today, once again, is lazy government—a government that cannot be bothered to put its case to the public; a government that cannot be bothered or is too fearful to allow this debate to happen. We are seeing the government push this through as quickly as possible so that the debate will not happen, knowing that many Australians will not even find out that Snowy Hydro has been completely sold for many years to come—if at all. Without the strength to debate it, by this unseemly haste the government is completely hiding its actions to sneak it through as fast as possible without debate to hide it from as many Australians as possible and without allowing the stakeholders to debate this in the way that it should be debated.

Having said that, I do appreciate that the government is supporting the amendment Labor have moved, which at least seeks to protect the interests of some of the stakeholders. But I would just like to put it on record, as we act today to sell off a part of Australia’s national character, that I find it unbelievably offensive that I do not have the time, as the representative of the people of my electorate, to go back to them and allow them to put their case to me.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Before I call the member for New England, I thank the member for New England for facilitating my contribution in the Main Committee, which allows me to be here now, calling him on. I thank him for that courtesy, which I did not have time to do then.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I am amazed that this motion relating to Snowy Hydro Ltd has come before this chamber today. I am sure many other members of this chamber were, like me, not aware that this was to happen. All of a sudden, on a very important issue we find that the removal of an asset of the Australian people is going to take place on the passing of a motion in this chamber. I listened to the member for Calare, and he made a very important point that this is a very important asset. It is not only an asset in terms of its dollar value but also an asset in terms of the Murray-Darling system and the Murray system in particular. It is an asset in terms of the future of one of our key environmental precincts: the ranges of the Snowy Mountains and the Snowy River. There are a whole range of interrelated factors that this sale could involve.

I am told—and I am open to persuasion here—that the agreement that is being contemplated here could essentially lock the environmental and water entitlement outcomes in place for the next 100 years. If that is the case, we are talking about a much broader debate than that of the sale of a garage block parked on the corner that a government—in this case, the New South Wales government—does not particularly need or does not particularly want. I do not believe that there has been nearly enough information put in the public arena or nearly enough debate within this chamber—or within the broader public domain—for us to be considering this motion at this point in time. I definitely will not be supporting this motion before the parliament.

I note that my Independent colleague from Victoria, Craig Ingram, has made certain suggestions and complaints about the possible impacts on water entitlement holders, the environmental needs of the Murray system into the future and the way in which the full privatisation of the Snowy system could impact on other people further downstream in future. It brings to mind the Telstra debate. What we were told during the Telstra debate—and the President of the National Farmers Federation at the time said he had received guarantees—was that the government would lock in place, in legislation, equity of access to and pricing et cetera in broadband and telephone services for country Australians. No-one has seen that yet. No-one from the Prime Minister down will indicate where that actually appears. The Leader of the National Party made some obscure remark one day that it appeared in a statement that some senator had made in the Senate. We have been unable to find that statement.

Irrespective of that, a statement in the Senate is not law that binds a future owner to the delivery of certain services to country people—particularly if those services have not been invented yet. As we all know, this parliament—and I note with some interest the amendment that the Labor Party are putting up—cannot bind a future parliament to anything. It is not within its constitutional jurisdiction to do that. So it was fantasy, with the privatisation of Telstra, to say: ‘Don’t worry, it’ll be okay, it’s locked in legislation. We, the government of the day, can demand that the future owner or owners, either in the national or international interests, will deliver services, some of which haven’t been invented yet.’ I am sure we will see those utterances and commitments ploughed under in the decades to come as some new technology comes online. The demands from country people will be heard and the political system will say: ‘We don’t own that anymore. We don’t have the capacity to tell a private company what it can do. We don’t have the right to interfere with their capacity to borrow to provide services that are not viable in terms of their bottom line to country people.’

I think we are seeing another instance of that occurring in this motion in relation to the Snowy Hydro that is before the parliament today. There are so many unknowns about the Murray-Darling system that this is not the time to place into private hands an instrumentality that could have an impact on the environmental and water entitlement needs of that system. To reinforce that argument, we have recently had appointed by the Prime Minister a parliamentary secretary to look into the water issue. In recent years we have seen the formation of the National Water Initiative. In recent weeks we have seen great concerns expressed by people heading up the National Water Initiative that it is failing to deliver. Here we see a motion before the parliament to put into private hands an instrumentality that could have a dramatic impact particularly on the environmental and water entitlement needs. It could have a dramatic impact on the availability of water and the environmental and economic impact and effects that water may have downstream.

The Parliamentary Secretary to the Prime Minister, Malcolm Turnbull, has been asked to look at a whole range of issues. I will highlight a bit of the history of the water debate and why the National Water Initiative is failing. In 1995 the Commonwealth and state governments signed off on an agreement of the Council of Australian Governments on national reform. That reform was to embrace gas, transport, electricity and, very importantly, water. The states and the Commonwealth quite rightly, and I congratulate them, recognised, as the member for Calare mentioned a moment ago, that there is a need for a national view to be taken on water—and other things but particularly on water—that crosses state boundaries and for a national solution to be adopted.

From 1995 to 2006 a whole range of intergovernmental and bilateral agreements have been made. We had the National Action Plan for Salinity and Water Quality. We had a whole range of things occurring. It all looked good and read well. We also had this process of water reform that was underpinned by two things, one of which the new parliamentary secretary is very interested in and the other one he is not so interested in. One was the establishment of a trading mechanism for water so that, under competition policy rules, it could be traded to its highest value use. That was the logic of 12 years ago. The other one that he is not so interested in—and I can understand that; he comes from a market driven background where people make profit out of selling things rather than producing them—is that a properly constituted and recognised property right be established. Those were the two basic pillars on which the COAG arrangements and the whole water reform process were underpinned.

Various ministers recognised that the National Water Initiative—which is really a rebadging of the old process—was not working. It was obvious it was never going to work when there were differences in trading mechanisms and security levels within the various states, differences in security levels between ground water and river water and the nontransportability of some of those waters—the incapacity of water to run uphill, for instance—and the impact of that on licences and the various market arrangements that you could put in place. It is becoming very clear that that market driven mechanism of 11 years ago that was talked about has not worked and is unlikely to work within the structure. The Snowy Hydro motion that we are talking about is a very important ingredient of that mechanism and the entitlements of that mechanism.

Since 2005, as I have said, we have had all of these utterances. The lever for the COAG process to demand that the states comply with those two basic pillars was to be the capacity to withhold national competition payments from the states. That was the lever. The Commonwealth was being the champion by bringing these renegade states together to formulate a national policy for the betterment of the nation and, if they did not do it, the Commonwealth would withhold those funds from them.

I have been accused in this place of having some sort of personal vendetta against the former Deputy Prime Minister, John Anderson, but one matter about which I have taken great issue with him—and I still do because I think he failed—is that he, the Prime Minister and others within the government allowed this constant flow of competition payments to the states without compliance with those two basic pillars that were set in place in 1995 and reinforced in every intergovernmental and bilateral arrangement, reinforced in the national action plan and reinforced in the National Water Initiative. We have gone through a whole series where we have run out of competition payments and it is all being renegotiated again. So I hope we do not go into this fantasy land again where the minister of the day says, ‘If they don’t do it this time, we’ll withhold their competition payments.’ So we have seen this farce.

I remember asking the Prime Minister some years ago about, I think, $300 million being handed over to the states to comply with the National Action Plan for Salinity and Water Quality, and the Prime Minister said that the property right issue would be addressed. We have heard for 11 years that it would be addressed. Now we see the new parliamentary secretary is looking at that issue. There is a fear of the word ‘compensation’. We have seen over that period property rights not being recognised. There is a mealy-mouthed phrase in the National Water Initiative and there is a mealy-mouthed phrase in the New South Wales Water Management Act 2000, to which there was an amendment in the New South Wales parliament only a few days ago to embrace this property right issue.

We have seen nearly $5 billion come through the federal system and be paid to the states when the major issue of reform that was talked about back in those days has not been touched at all. To be here today talking about a motion to sell one of those instrumentalities that has an impact on the downstream water entitlement holders of the Murray system is an absolute disgrace. Irrespective of whether or not New South Wales is stupid enough to sell this piece of infrastructure, the Commonwealth should not be compliant with it just because they believe that privatisation is a good idea, that the word fits with page 8 of the Liberal Party bible. That is not good enough. The National Water Initiative should in fact be that, not a National Party slush fund where $50,000 will be passed out to little community groups. The main focus of sustainability will pass us by, as it has over the last 12 years.

We have seen this absurd situation in the last few weeks where the government is taxing the compensation payments of ground water users. I implore the parliamentary secretary, Malcolm Turnbull, to look at the basic features of the National Water Initiative, look to do something about that, but look at those two pillars that were put in place. Unless you look at those pillars and recognise compensation for those who are going to lose an entitlement, the National Water Initiative will fail. (Time expired)

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I only just realised that this motion relating to the Snowy Hydro Corporatisation Act 1997 was on the table in the House for debate as I was passing by a television. I have taken the opportunity to come into the House not just to talk about the Commonwealth government’s motion on the table but to put my point of view and my objection to the states selling the controlling shares, 58 per cent, in the Snowy Hydro. I believe it is an amazing issue not only for the people of the Riverina but for all Australians. The fact that 58 per cent of the Snowy Hydro will be sold off by the New South Wales government, in conjunction with the 13 per cent that the Commonwealth holds and the additional holdings of the Victorian state government, is to me a blight on the history of Australia.

I have reason to be concerned because much of my electorate was delivered and advantaged by the introduction and the building of the Snowy Hydro Scheme. Snowy Hydro, as we know, owns all of the assets of the Snowy—the dam walls, the foreshore, the tunnels, the lakes and the power stations. The proposal is that all of the Snowy Hydro be sold. As we all know, the Snowy Hydro is owned by the governments of Australia, New South Wales and Victoria.

A constituent of mine has recently outlined his issues. David Hain, in his correspondence to me, wrote:

There are many arguments against the sale of the Snowy but they reduce to two. Firstly, cultural and secondly that our politicians are spending our financial and ecological future for the sake of present political and financial expediency. They are, in effect, selling the family silver to finance—

their operations. We talk about New South Wales presumably already having earmarked their spending of the proceeds from any sale of this scheme. I am sure it will go into much needed funding for education, health, the environment, community services and infrastructure, but why should you sell off the family silver in order to fix the mismanagement of your state over a period of years? To me it seems absolutely disgraceful to be selling off an icon such as the Snowy to satisfy the mismanagement of the government in New South Wales over a long period of time.

It is no secret in this House that I am anti privatisation. I did cross the floor to vote against the sale of Telstra because we as a government were selling the controlling shares of Telstra. I will not be crossing the floor today if there is a vote called on this motion because the government has only 13 per cent of the shares in this company—it is not selling the controlling shares—but I do want to record in the strongest terms my objections to this sale. As I said, there are many reasons, but two primarily, that confront us. As my constituent says:

Selling the Snowy will soon create irreconcilable conflicts of interest between each of the shareholders, irrigators, environmental needs, electricity generation, recreational users, tourist operators and country towns downstream. It will perpetuate existing conflicts.

As it is impossible to foresee every future contingency no present financial, operational, political or environmental contracts will suffice.

I certainly agree with my constituent in that regard. As he writes:

There is only one Snowy Mountains in Australia, one water runoff from them and one Snowy scheme, which is unique and cannot be repeated, duplicated or replaced.

The three government owners, each for their own reasons, are selling this very significant icon off. I would like to bring into play at this point in time the book called Snowy: The Making of Modern Australia by Brad Collis. It is an extremely poignant and pertinent history of the Snowy. It brings to you the sense of pride and the heartfelt strength of unity that was able to be brought about because of the devastation in Europe after the war. Hundreds of thousands of people were displaced. We had great cities being turned to rubble. Millions of people were homeless, starving and facing a bleak future.

After World War II and the devastation in Europe, across the other side of the world Australia—an emerging nation with a limited population—had a dream and a vision. The vision was to secure Australia’s sustainability, acknowledging the requirement for electricity and water. Chifley got a cable from the United Nations which asked whether he would accept 100,000 displaced people. Chifley threw his hands in the air and said: ‘My goodness, 100,000? What an enormous number of people to bring in.’ But his government had dreams and aspirations, and he asked questions: how do we harness the snow from the alps? How do we bring that into a contributing process to ensure the sustainability of Australia? How can we harness water to provide us with electricity? More importantly—and there was some argy-bargy between the states and the Commonwealth on this—how can we deliver irrigation to the Murrumbidgee, the Murray and other areas across Australia that can provide us with production for domestic and export benefits for the people of Australia?

The request from the United Nations coincided with Australia’s desire to build the greatest vision, the greatest dream. Chifley, in his wisdom, decided that tens of thousands of people from Europe’s razed cities and refugee camps could begin a journey that would transform not only their lives but the face of an entire nation. We saw allies, oppressors and victims working together to build the nation of Australia. On the cover of this fabulous book Snowy: The Making of Modern Australiaand I commend it to everybody—we see the epitome of what this is all about. It says:

The Snowy, the making of modern Australia, celebrates one of the most dramatic and inspiring episodes of modern Australian history. It is a tribute forty years on to the vision behind the scheme, the expertise of its designers and the tens of thousands of workers from more than thirty different countries who made it possible.

I quote again:

The Snowy Mountains Hydro-Electric Scheme began in 1949, was twenty-five years in construction, and remains one of the world’s greatest engineering and social achievements. Many of the workers who poured into that rugged mountain frontier in a strange new land to build new lives for themselves and their families had recently been enemies in the most devastating war the world had ever seen. They created, under extraordinary hardship and isolation, one of the wonders of modern engineering and sowed the seeds of an entirely new society.

I stand before the parliament today in the recognition that my irrigators councils believe that the privatisation of the Snowy will mean no difference for the water entitlement holders in my electorate. I can only take them at their word that they have discussed this, that they have investigated this fully and that that is why they support it.

My irrigators—Murrumbidgee Irrigation and others—say they widely support this sale and that it will not have an adverse effect on water entitlement holders. However, I stand in this House today to put forward my strongest resistance to this sale. The Snowy Mountains Hydro-Electric Scheme is an Australian icon, and the building of it was a feat that will never be repeated. The scheme has built Australia. I cannot see such a vision—where an amazing feat has been achieved that has secured the Australian people’s future through the delivery of electricity and water—ever coming out of a parliament again. As a result of this icon having been built, we have fed not only our nation but also millions of people across the world.

I discovered that this motion was on the table when I walked past a television, and I wondered what was happening. I have now had an opportunity to put on record my strongest opposition to any sale of the Snowy and my strongest opposition to selling into private ownership 58 per cent of the entire Snowy network to fund mismanagement by successive governments in New South Wales. I oppose it vehemently—as, I believe, will the majority of people in my electorate—because the Snowy is about more than just selling the family silver to enable the New South Wales government to make promises in the lead-up to the next election to retain office. I thank the House for this time to enable me to put on record my objection to this sale.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Parliamentary Secretary, do you wish to speak in reply to the debate?

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

No.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the member for Melbourne’s amendment be agreed to.

A division having been called and the bells having been rung—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

As there are fewer than five members on the side for the noes, I declare the question resolved in the affirmative in accordance with standing order 127. The names of those members who are in the minority will be recorded in the Votes and Proceedings.

Question agreed to, Mr Andren and Mr Windsor dissenting.

The question now is that the motion, as amended, be agreed to.

A division having been called and the bells having been rung—

As there are fewer than five members on the side for the noes, I declare the question resolved in the affirmative in accordance with standing order 127. The names of those members who are in the minority will be recorded in the Votes and Proceedings.

Question agreed to, Mr Andren and Mr Windsor dissenting.