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

I move:

That, for the purposes of subsection 7(3) of the Snowy Hydro Corporatisation Act 1997, the Senate approves 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 senators are aware, Snowy Hydro Ltd is the company that owns and operates the Snowy Mountains Scheme. The New South Wales government owns the majority of the company with a 58 per cent stake, the Victorian government owns 29 per cent, and the Australian government has the residual 13 per cent stake in that company.

On 16 December last year, 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. On 7 February this year, following careful consideration by our government of the implications of the New South Wales decision, the Minister for Industry, Tourism and Resources and I, as the ministerial shareholders for the Commonwealth stake, announced the Australian government’s intention to join the New South Wales government in offering its minority stake in Snowy Hydro to the market. The Victorian government has since announced that it too will participate and sell all its shares in the company.

Section 7 of the Snowy Hydro Corporatisation Act 1997 provides for the Commonwealth to dispose of or deal with its shares in Snowy Hydro. Where this reduces the Commonwealth’s shareholding in the company below the 13 per cent initially issued to the Commonwealth at corporatisation in 2002, the section requires the approval of the parliament to be obtained. The IPO process announced and led by the New South Wales government is expected to be completed by the end of June 2006. Accordingly, motions seeking resolutions in favour of the transfer or disposal of the entire Commonwealth holding have been tabled in each house at the earliest practical opportunity.

The sale of the Commonwealth’s minority shareholding is, in our view, in the interests of Australian taxpayers and consistent with our government’s strong support for the privatisation of government owned electricity generators and increased competition in the national electricity market. Under our 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 and continue to be the second lowest in the developed world.

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 $1.5 billion per annum to the Australian economy. So the floating of Snowy Hydro as an electricity company will give this company the opportunity to grow its energy business and raise capital in the future unconstrained by government ownership. Among other things, this completes the reform of Snowy Hydro governance started by the corporatisation of the company in 2002, in which all governments participated, and provides the best opportunity for Snowy Hydro to optimise the operational benefits of the Snowy scheme’s unique assets and maintain its competitive edge in the electricity market in the decades ahead. The sale also reinforces the separation of regulation and ownership and removes the potential conflict of interest from the New South Wales government currently owning energy companies that compete with and are customers of Snowy Hydro.

Importantly, the sale of the company will not change in any way the strict and rigorous rules underpinned by intergovernmental agreements which secure the water of the Snowy catchment for downstream use by irrigators and also for the environment. The strict regulatory framework was entered into by governments as part of the corporatisation of the scheme in 2002 on the basis that it would continue to apply in full irrespective of who owned the shares in the Snowy Hydro Ltd company. While Snowy Hydro owns the physical assets such as power stations and dams that comprise the 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 to by the Australian, New South Wales and Victorian governments in relation to the corporatisation of the scheme in 2002.

I do want to emphasise that except for the releases designated under the regulatory regime for the Snowy River below Jindabyne, and subject to evaporation and similar unavoidable losses, all the water collected by the Snowy scheme is ultimately released into the Murray and Murrumbidgee systems after most of it has been employed to generate clean and renewable energy. The Australian government has explicitly acknowledged the importance of clarity with respect to arrangements for the timing of water releases made from the Snowy scheme into the Murray-Darling Basin Commission storages used to regulate river flows for irrigation and for the environment. In this respect I understand that Snowy Hydro and the commission are developing a data exchange agreement and are actively working towards improving other mechanisms related to the sharing of information that will assist in the efficient operation of the storages.

The government anticipates that buyers of Snowy Hydro shares will include Australian superannuation investment funds, individual Australian mum and dad investors and, I think very importantly, Snowy Hydro’s current and many past employees who can now have a stake in this company. The floating and subsequent trading of Snowy Hydro shares will, as is the case with any other Australian companies, be subject to regulatory oversight by the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and the Foreign Investment Review Board. With the exception of superannuation, the sale of Snowy Hydro is not expected to change the employment arrangements for staff. The company will of course remain focused on the Snowy Mountains and Cooma and it is required to keep its head office in Cooma and that is where its core business assets and employee base are located.

In relation to superannuation arrangements, staff would cease to be eligible to contribute to the Commonwealth superannuation schemes consistent with the longstanding government policy that predates our government, that when a government body is privatised contributory membership of these schemes will cease. Members of the schemes are entitled to the benefits provided by the schemes in this situation and I understand that the company is well advanced in making available suitable replacement arrangements for employee superannuation.

As I said, the New South Wales government is leading the joint sale process as the majority shareholder. As the minister responsible for the sale for the Commonwealth I am pleased to report a very high level of cooperation among the Australian, Victorian and New South Wales governments in this process. I should also mention the very strong interest by the member for Eden-Monaro, Mr Gary Nairn, in ensuring access to the lakes that comprise the scheme for both boating and fishing, and we have been working with the member for Eden-Monaro to ensure that that remains the case. We have sought legal advice on that matter to ensure that the public can continue to have access to these significant water bodies and at this stage we are confident that that access is assured.

In conclusion, selling Snowy Hydro through this initial public offering, a process instigated by the New South Wales government but which the Victorian and Commonwealth governments have joined, will allow the company to reach its full potential as a responsible provider of clean energy and water flows for both irrigation and the environment. I commend this motion to the Senate.

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

As the minister has indicated, we are discussing the sale of the majority shareholding in Snowy Hydro Ltd. The New South Wales government announced on 16 December 2005 its decision to sell its majority shareholding in Snowy Hydro Ltd through an initial public offering known as an IPO. Following that decision Victoria has also announced that it will participate in the IPO and on 7 February this year the Australian government announced its intention to divest its minority share in the company. New South Wales is the majority shareholder with a 58 per cent stake, Victoria has a 29 per cent shareholding, and the Commonwealth owns some 13 per cent. It does require parliamentary approval. The Snowy Hydro Corporatisation Act 1997 requires the approval of parliament for the divestment of the Commonwealth’s shareholding, hence the motion we are dealing with today. Motions are being moved—and I am not sure where the process is at in the House of Representatives—

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

Tomorrow.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to 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.”

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

The Democrats do not support this motion from the government to approve the divestment of the Commonwealth’s 13 per cent share in the Snowy Hydro company. We are not opposed to privatisation per se. We make our judgments on every proposal for privatisation on its merits. We also challenge the government’s arguments for this divestment. The government usually trots out the same old argument that the corporation cannot invest. I think that is ironic, given that the Snowy Mountains scheme is there because of massive public investment many decades ago. And I doubt very much that the private sector would have been even remotely interested in making investments at that time or even now. That it was such a major undertaking is the reason it is public, not because of some other strange quirk of decision making.

The other argument by the government is that governments cannot regulate and provide services. Again, there is no proof of that. That is the same argument, of course, that is used for Telstra. Leaving that aside, we believe that, as a bare minimum, state and Commonwealth governments should retain their shareholdings until at least 28 per cent of the river’s original pre-dam flows are restored, environmental damage to the Snowy River habitat has been addressed, environmental protections are in place and significant amounts of water have been returned to the Murray. That is our main reason for opposing what we are facing today.

The Snowy hydro scheme had a profound impact on the health of the Murray and Snowy rivers, damming 2,300 gigalitres of water to be used for irrigation and generating hydroelectricity. Undoubtedly, these developments have helped to generate the material prosperity that we all share today. But they have also racked up an enormous ecological debt. The Australian Conservation Foundation report that, throughout its length, the diversity of the Snowy River’s habitat has been all but destroyed through the deposition of silts and sand, resulting in drastically reduced fish populations, a dramatic reduction in macroinvertebrate diversity, altered river bank vegetation and weed invasion.

At Orbost in Victoria the lack of flows has also meant that seawater now intrudes many kilometres upstream from the Snowy’s mouth, impacting on local land-holders and dramatically changing the ecology of the river. The Democrats are concerned that, fully privatised, there will be little incentive to restore the river system and protect the surrounding environment. In December last year, a spokesperson from the Victorian government told the Australian Financial Review that the state was not in a position to consider selling its holding, because it was not satisfied that there was sufficient environmental protection in place. I do not know what has happened in the last three months, but now it has agreed to sell its shares. I have to say that I am not confident that we have seen measures that should satisfy Victoria or us in that process.

We also note that the New South Wales and Victorian state governments have committed to increasing environmental flows to 21 per cent of the river’s original pre-dam flows by 2012, and to eventually increase that to 28 per cent. That is the point at which we should divest this investment, if at all. Presumably, these governments were once using profits from the Snowy hydro scheme to fund that promise but, once sold, we can see little evidence that they will find the money from elsewhere to ensure that that commitment is delivered upon. It does not make any sense to us to do it this way.

The Democrats believe that if the divestment of Commonwealth government shares in Snowy Hydro is to proceed, as obviously it will because the government has the numbers—unless Senator Heffernan decides to cross the floor; that would be interesting—the proceeds should be used to secure the recovery of the Murray and Snowy rivers for the benefit of the environment and the communities that rely on them. We say that is only fair.

While we oppose the divesting of government shares, we will move an amendment to the government’s motion to ensure the money is put towards repairing the Snowy and Murray rivers. That amendment states that the funds appropriated from the divestment of Commonwealth shareholding in the Snowy River Hydro company will be used to ensure that 28 per cent of the Snowy’s original flows are in the river by 2010, fulfil the existing commitment to establish the Snowy River scientific committee and the remainder directed into the Living Murray initiative as additional expenditure already committed to the scheme. We think that is far preferable to the revenue from this sale simply going into consolidated revenue or being used as a war chest by the government for the next election, which is probably more likely. I say to Senator Sherry that he needs to know that the Living Murray initiative is about infrastructure, so if he wants the money to be used on infrastructure, as the ALP amendment indicates, then it would happen if they supported our amendment.

As mentioned previously, the New South Wales and Victorian governments have committed 21 per cent of the river’s original pre-dam flows by 2012 and will eventually increase this to 28 per cent. Again, we have seen no time line for that, so we do not know when this is going to take place. It could be next century for all we know, and there is very little by way of confidence, I think, out there that this is going to be achieved. According to the World Wide Fund for Nature, existing commitments will leave the river system flowing at just above a fifth of its original flow, and given the recent—quiet, I might say—recommissioning of the Mowamba aqueduct, it appears that even that relative trickle is not a certainty. So much more needs to be done.

The Snowy is the first link in the Murray chain and, if governments are not willing to enforce appropriate limits on environmental extractions at the top of the river system, the whole Murray planning regime becomes little more than an exercise in managing decline. Therefore we believe the proportion of money from the sale of federal government shares should be used to fast-track water recovery to return to 28 per cent of pre-Snowy scheme flows, and a time line is also necessary. We think that 2010 is not only feasible but absolutely necessary.

While the government has already budgeted $2 billion over four years to the Living Murray initiative, which aims to return an annual average of 500 gigalitres of water to the River Murray by 2009, there is no doubt in our minds that this is not enough. Five hundred gigalitres is only one-third of the amount that water scientists say is the minimum required to return the Murray to health, and reports suggest that to date the commitment has not yet translated into any real additional water coming down the Murray.

On top of that, scientists predict that climate change will cause a decrease of 16 to 35 per cent of water flows into the rivers of the Murray-Darling Basin by 2050 with a most probable 1,100 gigalitre reduction of inflow into the River Murray by 2023. That reduction would wipe out twice over the intergovernmental target increase, and it will not hang around until 2050 for that to happen or even 2023. It will be a gradual decline in inflows. Clearly, more needs to be done and we argue that a significant portion of the sale proceeds should be used as additional funding to that already committed by the government to return more water to the river.

Finally, the Democrats are concerned that the promise of a Snowy scientific committee has not been fulfilled. There is still no sign of that promised initiative. Basic scientific monitoring of river health to deliver required flows is essential for proper checks and balances, and the government should urgently fulfil that promise. If the government insists on divesting public shares in the hydro scheme, at the very least it should ensure that the money is used to benefit communities who are suffering as a result of environmental degradation and water losses, as any responsible government would do.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

There was movement at the station for the word had passed around that Beijing and Tokyo and Chicago and Paris were on their way, and they have got more than a thousand pounds in their pockets. What is afoot here is the sale of effectively the environmental amenity and the water that flows onto the Snowy Mountains of Australia to any interest in the world that sees it as profitable and wants to invest in it. Let us make no bones about this: this is a another example of this government, which uses all the iconic assemblages of Australia to promote its interests, selling out on an Australian resource, taking it out of the hands of the people and putting it into the market at the big end of town not only ably supported by but at the instigation of the Labor Party.

The shareholding that the Commonwealth is about to divest from the public to the corporate sector is the lesser of the three shareholdings—the other two being those of the Labor government in New South Wales and the Labor government in Victoria—selling out the public interest. The Minister for Finance and Administration, Senator Minchin, said a while ago here that this will give the public a chance to invest in the Snowy scheme. That is from the very blighted and blinkered narrow view that all the world is about investment and money. What this is doing is taking the public interest and selling it into the city. It is taking the public interest, which is our responsibility in the parliament to represent in this democratic system, and giving it to the big end of town.

It is of course a fact that the Snowy Mountains scheme is one of the most profitable power generators in Australia, with a 19.8 per cent return on the investment, according to the last figures available. That is a roaring big profit. That is money which comes to those Labor governments, as well as to this coalition government, that the public will no longer get after the sale. That is money which will go into the pockets of big investors. The bigger they are, the more able they will be to decide whether or not this is a profitable investment for them.

Senator Allison just put another figure into the mix—that is, the potential for a 30 per cent loss of flow off the Snowy Mountains in the next 40 years or so due to global warming, due to the inaction of the Howard government. That is when the current infants of Australia will be in the prime of their life. What will that mean? Let us just stop and have a think about that at the moment, instead of holding it in complete ignorance, as this government did. By the way, I would recommend that the Prime Minister and his several ministers, including the Minister for Finance and Administration, look at the current edition of Time magazine. It is not their first edition devoted to global warming but it underscores the ratcheting up of the global horror coming our way from this human-made destruction of the environment and our future economic potential as a global community.

The minister is not even listening to this, because governments do not want to know about it. What they do want to do is to continue to turn the natural amenity of our nation and the whole world into a money-making machine for a short-term materialist viewpoint which has no sustenance. It will not be sustainable into the future. What we can do from our position is to highlight the global brains trust which is warning about this, with the intention that at some stage it may get through to the populace of Australia that to keep voting for Labor and the Liberals is to keep voting for the environmental disaster unfolding in front of us. That is writ large in this debate this morning.

A motion has been moved. That is all there is. It is a motion to be passed by the weight of numbers now that the Howard executive has control of the Senate as well as the House of Representatives. As ever, it is ably supported by the Labor Party, which deprives the Australian people of their right to have a say in this. There are irrigation interests. There are cities and towns along these great river systems. There is the urban interest. There is an enormous environmental interest. We have to represent the voteless millions who will live in these catchments in the years ahead, because we do not share the government’s blinkered view that all that matters is the next three years.

It is very important to recognise that the public is being defrauded of its opportunity to have a say and to increase the intelligence upon which a debate like this is based within the parliament simply because the government says: ‘We’ll put it through by motion. We won’t legislate this important matter. In the process, we’ll deny the people of Australia and particularly the people in the Murray-Darling Basin and the Snowy catchment their opportunity to come and say to the parliament: “This is our viewpoint.”’ The minister says, ‘Well, the public will be able to invest in this.’ One thing the minister is about here this morning is insisting that the public have no say in it.

On behalf of the Greens, I will be supporting the Democrats’ amendment to have the short-term gain the government will get from this invested in the environmental amenity of the rivers into the future. But how much more important it is that we give the public an opportunity to have a say on this non-urgent motion. That is why I will be moving that there be a reference of this imminent sale, before it happens, to the Senate Rural and Regional Affairs and Transport References Committee.

Ross Lightfoot (WA, Liberal Party) Share this | Link to this | Hansard source

You should foreshadow that motion, Senator Brown, because we already have a motion before the chair.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Thank you. I will do that. I foreshadow that I will be moving that the proposed divestment of the Commonwealth’s shareholding in Snowy Hydro Ltd be referred to the Senate Rural and Regional Affairs and Transport References Committee for inquiry and report by 30 June 2006. We will have a vote a little further down the line in which I expect the Labor Party will join the government in voting out the public’s right to have a say in this matter. Nevertheless, it is very important that we test the government on that and show the lack of faith they have in the Australian people now that they have been voted into this position of overweening power over the Senate.

The Australian Conservation Foundation are experts on the impact of European settlement on the Murray-Darling system. They released research in the last year on the Coorong. I flew over the Coorong a couple of weeks ago on that direct flight from Adelaide to Hobart, which I would recommend to anybody. It is one of the most majestically scenic flights you could do anywhere in the world. It travels down the coast, along the Coorong, then across Mount Gambier to King Island, then to the Tarkine wilderness in Tasmania, then across Cradle Mountain and the central plateau and into Hobart. It is absolutely spectacular.

I will not go to the impact on the Tarkine and elsewhere further along that flight, but let us look at the Coorong, this extraordinary area in the state represented by Senator Minchin. According to this research, at the mouth of the Murray River in South Australia the Coorong is in terminal decline; it is on its death bed. It risks permanent collapse unless more water is provided for the Murray. Senator Allison talked about the government’s pathetic aim to put 500 extra megalitres into the Murray over a 10-year period. What it needs in fact is 3,000 megalitres as a minimum, which would be 25 per cent of the original natural flow of the river. What we are talking about here is 500 megalitres in a river which had an average flow of over 12,000 megalitres. But, as Senator Allison said, there is very little sign of the 500 megalitres anyway. This is a situation that is an absolute ecological disaster now.

Senator Minchin may stare at the desk, but the fact is that he and the government are responsible for not responding adequately to this absolute disaster, which is going to get worse. One of the big reasons it will get worse is because of global warming, and prodigiously out in front—the villains—in creating global warming are the Howard government and this minister.

The Australian Conservation Foundation says that scientific studies and surveys of the internationally acclaimed area—it is not protected—of the Coorong show that pelicans have not bred for almost four years. The Coorong was Australia’s largest permanent breeding colony. Brine shrimp, never before recorded in the Coorong, are now as thick as soup. They need salty water. Fresh water is being replaced as the sea comes in and the natural fresh water flow diminishes. Salinity levels are three times that of sea water—it is moving towards becoming a Dead Sea type of environment. Twelve species of native fish are locally extinct. I am looking forward to Senator Minchin commenting on each of these points.

The number of migratory wader birds has dropped from an already depleted 150,000 in the 1980s to 50,000. The curlew sandpiper has dropped in numbers from 40,000 to 2,000. Ninety-five per cent of them are gone, with five per cent hanging on. Local extinction, at least, hangs over their head, with global extinction not much further down the line.

A healthy Murray River is vital for a number of reasons, including the following: the now constant threat of closure of the Murray mouth; the rising trend in salt levels in the Murray in South Australia, meaning that within 20 years Adelaide’s drinking water supplies will exceed the World Health Organisation’s salinity standards for drinking water every two days in five on average—that is the projected outcome for Adelaide; gravely threatened red gum woodlands across the southern Murray-Darling, and we know the figures there—70 per cent of them are dead or dying; declining populations and diversity of native fish and water birds; and threats to the economic value of tourism and recreation in the Murray.

It does not say this on this sheet, but let me add that unless this is addressed there will also be a broken heart—again—for the Indigenous people, who were the custodians of this great river system through enormous changes in climate over eons and who have effectively been cut out from having a say about the management of their river as we move more and more to leaving it to the market and to people sitting in velvet lined boardrooms somewhere else on the planet.

The ACF have a footnote here which says that a recent shocking report indicates 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—that is up to the end of last year—which is an increase of nearly 50 per cent.

The point to be made here is that this motion will place the future of that ecosystem in the hands of the careless market, which is not concerned about the environment except to see it as a threat to its profitability. This is the Labor Party joining the coalition to effectively straitjacket future action on behalf of the public interest to try to restore the Murray, which is facing, as Senator Allison said, a further 30 per cent decline due to global warming on top of this disaster.

The question to Senator Minchin—who used the word ‘environment’ once in his speech—is: where is the action plan for this now disastrous situation? When is this government going to get off its bum and do something about this disastrous situation? When is it going to remove the blinkers? It is not going to do that. Moreover, it is going to pass to its friends in big business the plum of the Snowy hydro scheme, this most profitable of energy making public ventures; this great scheme of the Menzies government. At the same time, it is going to remove the ability of the public to—through governments in Sydney, Melbourne and here in Canberra—properly and adequately address the national environmental disgrace of the Murray system. Add to that the Snowy system, with its 28 per cent flow. This problem will forever be unable to be addressed further after this motion goes through this Senate this morning. Sobering, isn’t it?

‘Please don’t look at it’, however, say the government and the Labor Party. ‘Certainly let’s not have a Senate committee so that there can be public input about it. Let’s not have the Australian Conservation Foundation brought before a committee. Let’s not have the environmental brains trust of this nation brought before a committee. Let’s not even have the interests of the city of Adelaide brought before this committee, let alone the people living in Orbost or on the floodplain of the Snowy.’ I have read that the floodplain has been elevated by two metres simply because the outwash from the Snowy has been reduced so dramatically by this Snowy Mountains Scheme. It is the watershed of this Australian icon. It should be part of the Australian people’s destiny, but it is now being sold to unknown people, careless people, people who have never been there. They will be investing from somewhere else in this country and, much more likely in this globalising economy, from somewhere else in North America, Europe or Asia. That is what we are dealing with here today. That is what the Greens have foreshadowed to open debate on this. That is what Labor will support the government in shutting down, as it turns its back on an environmental disaster that ought to be one of this government’s prime responsibilities.

Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Link to this | Hansard source

I want to speak very briefly to this motion and I particularly want to support the amendment moved by Senator Sherry. We know that this is a fairly critical and emotional issue for many people. The Snowy hydro scheme is something that is held in Australian folklore as one of the most abiding symbols of nation building in Australia. It is part of our national psyche. I am sure that many people in the chamber can actually remember the ABC series last year about the whole development of the Snowy Mountains Scheme.

This is an important decision that the federal government is making here and one that we on this side of politics have agreed to support. But we want to ensure that the social, economic and environmental issues around this decision are considered very carefully. If you look at the work that went into the Snowy hydro scheme—the 100,000 workers who toiled for 25 years, basically, to construct it all—you would see just how important this scheme is in terms of our national infrastructure. But the process of sale and the process of corporatisation of the Snowy hydro system are complete and, now, the idea of moving to privatisation is part of that process, and will enable good governance and greater transparency in all that is going on for the national power industry as well.

I want to carefully remind people of the argument that we hear so many times from the government and from others, but definitely from the government—that is, that you do not actually have to own something to regulate it. That is an argument that is put here consistently in debates about assets and enterprises, and it is an important argument to understand. The corporatisation of the Snowy hydro scheme means that it is a private company that is currently controlled by three governments. That is proving to be quite a complex management process that is, in effect, detrimental, I suppose, to the environmental concerns that have been raised in the chamber today.

We are concerned about the use of local specialised contractors. We are concerned about ensuring that local employment will increase. I know that there are concerns in the communities around the Snowy that there would be job losses. However, in moving the amendment which is in Senator Sherry’s name, we are conscious of the importance of maintaining local employment. It will provide some opportunities for maintaining and upgrading the program for the Snowy scheme’s equipment and infrastructure and will allow some investment in critical infrastructure, which will help the environmental situation and guarantee that the environmental commitments of the Snowy scheme are met.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to 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—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

What are you doing about it?

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

If I could continue without interjection, these are matters that governments need to consider without being burdened with the matter before us—that is, ownership of shares in this company. Nothing that is done with the shares in Snowy Hydro has any bearing on this, but our government is probably the first government in Australian history to recognise the extent of the issues and is proud of the extent to which it is making very substantial investments in ensuring that it does as much as it possibly can to restore the health of the Murray River.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

What are your results so far? Tell us your results.

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

Senator Bob Brown knows full well the extent of the programs and expenditures for which we are responsible to ensure that we do our utmost to restore the health of the Murray. The fact is that whole industries and communities are vitally dependent—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Here come the excuses for your inaction.

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

on the extractions from the Murray River that have been granted to them under licences issued by state governments. It is all very well for Senator Brown to sit on the sidelines and lecture us all without ever having the responsibility of government. Of course, the great responsibility of government is to balance the needs and wishes of diverse interests around the community. The fact with the Murray is that we have a situation where there is obviously a very strong environmental interest, but there is also the fact of 200 years of development that has been entirely dependent on extractions of water from the Murray River for irrigation.

At the end of the day, the only way that governments can deal with that is to buy back that water from those communities. If you deny them the water, the communities die and the industries that depend on it die. Commercial trading in water is a vital part of this. We have to have realistic pricing for water so that water is used on a commercial basis. We also have to provide the market in water so that governments have the opportunity—free of the conflict of interest inherent in owning the electricity company—to buy the waters so that they can be used for environmental flows. That is something that I personally believe is the future for this river system. That is why I strongly believe that the Australian government has to retain a very responsible approach to fiscal policy to ensure it has the fiscal capacity in the future to ensure that it can manage, on a commercial basis, the provision of environmental flows for those rivers—

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

This is all waffle.

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

and do so in a way that does not, in a manner which presumably Senator Brown would have, destroy the communities and the industries that have been built up over 200 years and are dependent on those extractions. Senator Brown has the luxury of just pontificating from the sidelines with only one interest in mind. Governments and responsible parliamentarians must take account of the very diverse interests involved in this. It took us years to negotiate the corporatisation in such a way as to achieve that balance and make real breakthroughs in environmental flows for the Snowy, the Murray and the Murrumbidgee rivers. We as a government are very proud of what we have achieved. We are going to continue to ensure that we maximise our capacity to invest in restoring the health of the Murray.

I am happy to agree with Senator Brown that it is a magnificent experience to fly from Adelaide to Hobart. The Coorong is one of Australia’s great natural treasures. What has happened to that area because of 200 years of development of the Murray, in ignorance of the environmental consequences, is tragic. Our government are committed to doing as much as we possibly can to ensure the restitution of this great river system. In so doing, I seek the Senate’s support for the motion standing in my name.

Question put:

That the amendment (Senator Sherry’s) be agreed to.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

I move the amendment circulated in my name:

At the end of the motion, add:

“(2)   That the Senate is of the opinion that funds appropriated from the divestment of Commonwealth shareholding in the Snowy River Hydro Company, should be used to ensure that 28 per cent of Snowy’s original flows are in the river by 2010, to fulfil the existing commitment to establish the Snowy River Scientific Committee, and that the remainder should be directed into the Living Murray Initiative, as additional expenditure already committed to the scheme”.

Question put.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

Omit all words after “That”, substitute: “the following matter be referred to the Rural and Regional Affairs and Transport References Committee for inquiry and report by 30 June 2006:

The proposed divestment of the Commonwealth’s shareholding in Snowy Hydro Ltd”.

That is just so people can have a say.

Question put.

Paul Calvert (President) Share this | Link to this | Hansard source

The question now is that the original motion be agreed to.