Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I will respond, by way of reply, to comments on the motion and to the amendments. I refer firstly to the amendment moved by Senator Sherry. We find acceptable almost all of the amendment except for (2)(b)(i), which seeks to require that the proceeds from sale be applied to infrastructure to build productive capacity in the Australian community. On the basis that that clause remains in the amendment, we cannot accept the amendment moved by Senator Sherry. It is the government’s very clear view that governments, of whatever persuasion, should not hypothecate sale proceeds to particular purposes, which is effectively what this seeks to do. Sale proceeds have always been applied to consolidated revenue—and were under our predecessors—on the basis that governments should make objective and on-merit decisions about the application of consolidated revenue to the needs of the community, be they recurrent or capital, and make those objective decisions about, in this case, the infrastructure needs of the community and the expenditures that are appropriate to it, and not just by way of hypothecation. It is the case that these proceeds will be applied, as has always been the case and was under the previous Labor government, to consolidated revenue.

I am happy to indicate to Senator Sherry that the Commonwealth understands that the value of our shareholding is likely to be around $300 million. That will of course depend on the success of the IPO and the strike price, but we anticipate our holding of 13 per cent to be valued at around $300 million.

For those reasons we cannot accept the motion moved by Senator Sherry. But I would indicate that I am perfectly happy to give an undertaking on behalf of our government that we will report back to the Senate at the expiration of five years after the passage of this resolution on the performance and outcome of the share transfer and disposal, as per 2(e)(ii) of Senator Sherry’s amendment.

Senator Allison’s amendment essentially does two things. It relates to Senator Sherry’s latter point about the appropriation of proceeds to ensure that 28 per cent of the Snowy’s original flows are in the river by 2010 and the direction of any remainder to the Living Murray initiative as additional expenditure already committed to the scheme. The amendment is similar in wanting proceeds hypothecated to infrastructure needed to ensure we reach the 28 per cent flow.

For the information of the Senate I reiterate our government’s commitment to the arrangements agreed by the three governments—New South Wales, Victoria and Australia—at corporatisation, including those aimed at improving the health of the Snowy and other rivers by targeting, among other things, an increased flow in the Snowy to 21 per cent of average natural flows. That was the agreement reached by those three governments. We have invested $75 million in the entity that has been established to achieve that, and New South Wales and Victoria have each contributed $150 million to that end to ensure that that target is achieved. Of course, we have made very significant commitments over and above that to the health of Australia’s rivers through the Natural Heritage Trust, the National Water Initiative, the Living Murray initiative and other substantial expenditures by our government.

The implementation deed agreed by the three governments does provide an option for governments in the future to agree to participate in further increases to achieve after 2012 a total of 28 per cent of average natural flows. The New South Wales government has already started the process of establishing a Snowy River scientific committee with a view to seeing what would be required to achieve that 28 per cent target. At the end of the day that is ultimately the responsibility of the Victorian and South Australian governments, but a future Commonwealth government could of course participate in any additional investment to get beyond the 21 per cent once that target has been reached. That was very much the inference of the original agreement—a desire to seek to achieve the 28 per cent.

For the reasons I explained in relation to Senator Sherry’s motion, we cannot agree to Senator Allison’s amendment to this motion. However, I would ask the Senate to acknowledge what the three governments are doing to restore the health of the Snowy. It is a historical fact that the price Australia paid for investing in the Snowy Mountains Scheme was the degradation of the Snowy River. The whole idea of the Snowy scheme was to divert waters from the Snowy to the Murray and the Murrumbidgee—that was the essence of the scheme—and in so doing to generate electricity. You can agree or disagree with that original intent; it is now a fact of life. What does please me, particularly as a South Australian senator, is that people have recognised the damage done to the Snowy, and governments have joined and invested in seeking to at least partially restore the health of the Snowy River, albeit that it is now impossible to restore it to its previous natural flows.

Senator Brown has foreshadowed a motion to refer this to a committee for inquiry and report by 30 June 2006. The government will not be supporting that motion—for a start, just because of practicalities. The New South Wales government is proceeding with the sale of its 58 per cent regardless of what the Commonwealth does. Nothing that is done here in that sense will prevent at least 58 per cent being sold. Victoria will also join in. So all but 13 per cent will be sold in any event. We think it idiotic for the Commonwealth to sit there with its 13 per cent while the rest is sold. The New South Wales government is intent on a process which would involve that sale being completed by June. We do think in those circumstances it is sensible for the Commonwealth to participate. That is why we are moving these motions in these two houses this week.

Senator Brown was suggesting that there is some sort of democratic deficit in all of this. I point out that these motions are being moved pursuant to legislation passed by this parliament, the Snowy Hydro Corporatisation Act 1997, which required that these two houses consider this motion. That legislation was passed at a time when this government did not have a majority in the Senate. The democratically elected parliament approved it in those circumstances and put a process in place. These motions are being considered by two democratically elected houses of parliament speaking on behalf of the people in considering the motion moved by the government. So I reject out of hand the suggestion that there is some democratic deficit involved in this. Everybody in this parliament is elected by the people to express a view. Senator Brown is entitled to express his view, but at the end of the day it is for the two houses of parliament elected by the people to determine this matter on behalf of the people, and that is the process in which we are involved.

The rest of Senator Brown’s remarks were an interesting lecture on the environmental circumstances of the Murray River. They really had absolutely nothing to do with who owns shares in Snowy Hydro Ltd. It is a matter for governments and parliaments on behalf of the Australian people to determine what should be done about the current state of the Murray River. As a South Australian I am naturally very concerned about the state of the Murray River and the Coorong. Senator Brown certainly does not have a monopoly on concern for the health of that majestic river system. However, that is a matter that is to be dealt with regardless of who owns the shares in this electricity company.

Indeed, I would assert that it is much better that governments—that is, the New South Wales, Victorian, South Australian and Commonwealth governments, who all have a responsibility in relation to this river—exercise their responsibilities in relation to the health of that river without the prejudice and bias inherent in owning an electricity company that relies on those waters to generate electricity. By owning electricity, there is inevitably a conflict of interest which prejudices regard for flows in the Murray. That is one of the reasons that we have to sell Telstra shares. In relation to Telstra, I as the minister for finance have an inherent and vested interest on behalf of Australian taxpayers in maximising the returns from Telstra. Inherently with a commercial electricity company, the New South Wales, Victorian and Commonwealth governments are interested in maximising returns from Snowy Hydro as a commercial entity. We should divest ourselves of that conflict of interest to ensure that we as governments can focus on our primary responsibility, which is to ensure the health of that river.

It is a historic fact, which cannot be reversed overnight, that in 200 years of development there has been degradation of the Murray River. It is a regrettable fact of historic life that, in ignorance, early Australian settlers clearly denuded that river system, took more water out of the river system than it was capable of sustaining and had little regard for the environmental consequences of those extractions from the river for the development of agriculture in this country. We now have the benefit of knowing the price that has been paid for those extractions of waters under licences issued by state governments over what is now over a hundred years. Our government does understand those issues—