Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

Thanks, Minister. Motions are required to that effect in both the Senate and the House of Representatives. The share allocation among New South Wales, Victoria and the Commonwealth was agreed to in 1997 prior to the corporatisation of the Snowy in 2002. In the corporatisation principles agreed by the three governments the allocation was based on the entitlement of each government to electricity generated by the Snowy Mountains Scheme—and the electricity entitlements were set by the three governments back in 1957.

The government has viewed the sale of its minority shareholding as being in the interests of Australian taxpayers and consistent with its theme of privatisation of government owned electricity generators and increased competition in the national electricity market. There are some significant issues about future capital raising and investment and it will give the company some greater opportunities to do that in some vital areas of maintenance and an upgrade program required in respect of equipment and infrastructure over the next decades. The Snowy scheme is capital and technology intensive and some of the plant and equipment is very old—up to 40 years old—and in order to continue to provide a reliable source of water for electricity and environmental concerns in the decades ahead it is necessary for that upgrading to occur.

As a consequence of the upgrading program, there will be an increase in employment directly and indirectly through the use of local specialist contractors. Snowy Hydro will have access to funds it needs, over and above debt and internal cash flow, to pay for that maintenance and upgrading as well as continuing to expand its activities.

Electricity generation capacity has increased by some 10 per cent in eastern states and is now interconnected. Average retail electricity prices fell in real terms between 1994-95 and 2003-04 by some 14.6 per cent.

The issue of water is an important aspect to this. 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 and secure water flows. The agreements are legally binding and very detailed and were developed after significant consultation with stakeholders, state water authorities and the Murray-Darling Basin Commission. The regulatory framework that was entered into by governments as part of the corporatisation will continue irrespective of the shareholdings of Snowy Hydro Ltd.

While Snowy Hydro owns the physical assets, such as the power stations and the dams, it does not own the water it collects and releases from the scheme. There is a Snowy water licence administered by the New South Wales government, in accordance with contractual obligations, which gives the company a right to collect, divert, store and release waters. In return for these rights, the Snowy water licence imposes on Snowy Hydro the obligation to release specific 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 to by the New South Wales and Victorian governments in the Snowy Water Inquiry outcomes implementation deed for the corporatisation of the scheme in 2002.

It has been explicitly acknowledged that clarification is important to irrigators in respect of arrangements for the timing of water releases made from the Snowy scheme into the Murray-Darling Basin Commission storages and in respect of appropriate mechanisms for irrigators and the Murray-Darling Basin Commission. Snowy Hydro and the commission are currently in discussions regarding release and timing issues.

The matters that I have been referring to are being pursued by the government with other shareholders, governments and Snowy Hydro having regard to the needs of irrigators and the scheme as a peak electricity generator. It is not always easy to balance. There are the needs of irrigators. There is the need to ensure the efficient generation of electricity. There is also the need to ensure that there are adequate flows of water into the river systems to ensure protection of the environment.

On behalf of the Labor opposition, I will be moving an amendment to the motion moved by Senator Minchin. It has been circulated in the chamber. The government has made a number of claims in respect of employment, maintenance and upgrade, issues relating to water release, obligations for irrigators and environmental flow obligations. They are all very important issues, and the Labor Party generally accept the claims. We believe, however, given the importance of Snowy in the areas that have been indicated, that there should be a report back to the Senate or to the parliament after five years. After the passage of this resolution, there should be a benchmarking exercise against the claims made—they are not claims made just by the federal government; they are also made by the New South Wales and Victorian governments—and a report back to the Senate in respect of the issues that are laid out in the Labor amendment. We think that is a reasonable approach.

There should not be the view that, because the company has been sold off, the responsibilities end for governments. This is an important public asset and there are very important issues involved in respect of the flow of waters for irrigators, electricity and the environment. They are very important issues, and the parliament should not forget about those issues just because it is sold off. That should not be the approach. There should be a report back to the parliament, there should be some monitoring and there should be some benchmarking of the claims that are being made.

The minister was correct to point out and emphasise that the Commonwealth owns 13 per cent. The Commonwealth is not anywhere near a majority shareholder. We can anticipate that a significant proportion, probably the majority of the proportion of the shares that are released to the market, will be taken up by Australian superannuation funds. So, in one sense, whilst not directly owned by government, the ownership will be very significantly spread across the Australian populace by the superannuation funds—superannuation being compulsory—and effectively owned by the people of Australia.

There is one issue I would like the minister to respond to. I understand that there are confidentiality issues, but perhaps he could give us a possible range for the sale price of the Commonwealth’s 13 per cent. It would be useful to have some sort of ballpark figure. I do not want to know what the precise figure is—I do not think he can give that—but a ballpark figure would be useful.

I now want to turn very briefly to the Democrats’ amendment. The Labor Party will not be supporting the amendment. The amendment proposes that all of the sale proceeds should be used to ensure that 28 per cent of the Snowy’s original flows are in the river by 2010. We do not believe that we should lock in all of the proceeds from the sale in terms of environmental flows. There are a range of issues and good uses to which the moneys from the sale can be put, particularly infrastructure investments across a whole range of areas. We do not believe that the sale proceeds, whatever they may be—and that is one of the reasons why I have asked the minister to give us some sort of indication of the figure—should be hypothecated directly to the issue of the flows in the river by 2010. It would certainly be appropriate to use some of those moneys for that, but there may be other very good uses, from the Commonwealth’s point of view, to which the sale proceeds may be put. So the Labor Party will not be supporting the amendment to be moved by Senator Allison.

On behalf of the Australian Labor Party, I move:

At the end of the motion, add:

“(2)   To ensure that Government claims about privatisation are met, the Senate:

(a)

notes the Government’s claims that:

(i)

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

(ii)

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,

(iii)

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

(iv)

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

(v)

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; and

(b)

requires that:

(i)

the performance and outcome of the share transfer and disposal are reported to the Senate at the expiration of 5 years after the passage of this resolution, and

(ii)

the proceeds from sale be applied to infrastructure to build productive capacity in the Australian community.”