Electricity Commission (Amendment) Bill

Debate resumed from 21 April.

Mr ROGAN (East Hills) [8.45]: I lead for the Opposition on this bill. It is proposed that the Opposition will move a number of amendments in
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Committee and it is likely that the Committee will divide on those amendments. At the outset I indicate that the Opposition supports reform of the electricity industry; it is necessary reform. Indeed, about 12 months prior to the 1991 elections the Labor Opposition's policy was the linking up of New South Wales with the eastern States of Australia as part of a national grid network. The Opposition saw the value of such a network. This bill is the result of an agreement arrived at in Hobart earlier this year at a meeting of heads of government. Part of the economic reform program for the nation and the States was the introduction of legislation such as this to give effect to the separation of transmission from generation in our power industry.

The Opposition is happy to support the reforms inherent in this legislation. However, the Opposition is concerned about a number of aspects of the legislation. Though the bill comprises only a small number of clauses, the Opposition envisages significant ramifications for the power industry following the passage of the legislation. Reform of the electricity industry did not come about with the change of government in 1988. The reform process was well under way with the reforms introduced by Peter Cox, a former Labor energy Minister. I point with some pride to his achievements. Peter Cox, following the McDonell inquiry into the New South Wales power industry, introduced a comprehensive and wide-ranging package of electricity legislation.

The McDonell inquiry followed the then Labor Government's determination that the industry improve its efficiency and effectiveness to meet not only the needs of the State's economy but also the expectations and demands of customers. That legislative package represented the most significant development in the electricity industry since the establishment of the Electricity Commission of New South Wales by a Labor Government in 1950. The legislation consolidated the industry's legislative and operational framework along commercial lines. It provided for co-ordination between all sectors of the industry and ensured the more efficient use of the community's electricity assets.

As a consequence of this legislative package Elcom, or Pacific Power as it is now known, is required to prepare a 30-year plan on a three-year cyclic basis, thus improving its efficiency, accountability, performance and overall planning. Equally, the electricity supply industry was made more accountable, and the significant advances we now see in the industry today have, as their origins, the Cox legislative package of 1987. I have referred to that program of the former Labor Government to indicate that the Labor Party had commenced the reform of the electricity industry - a reform that was interrupted by the elections of 1988 after which a new government came to office. The Opposition fully supports any progressive reform that is put forward in the Parliament by the Government that will seek to ensure that the electricity industry serves the needs of its customers and the community generally.

Though the Opposition supports the basic thrust of the legislation, it has grave reservations about what can only be described as the Government's secret agenda: privatisation of the electricity industry. The Minister will state that he is the Minister and that the Government at the moment does not have plans to privatise the electricity industry. But the Minister's assertion, which I am sure he will make in reply, will not stand up against what has become known upon release of documents last year by the Opposition. A privatisation agenda was set in place by Cabinet. The Electricity Commission management itself did not know of that agenda which Treasury put together for the sale of sections of the commission. The Treasurer said, in answer to a question asked in this House by the honourable member for Eastwood when those papers were released by the Opposition on 12 October last year, that the Government's privatisation policy is plain and open - it will privatise an asset when it is in the best interest of the community, that is, when the Government or Treasury believes it is in the best interests of the community.

The Treasurer also stated that the document "says nothing more or less than what we have been saying for more than five years" - that is, what the Government has been saying. He further said that it is about common sense in economic management, that is, the Government's definition of economic common sense and economic management. The Treasurer said the Government recognised the value it has in a range of public sector services, that it recognised that opportunity is open, especially to New South Wales taxpayers, to benefit from more efficient delivery of services, often through the private sector, and that where that will benefit New South Wales taxpayers the Government will consider privatisation.

The documents I refer to are Cabinet documents. A draft white paper entitled "Contracting and Market Testing", produced in August 1993, stated that the Government is firmly committed to applying the strategy and principles discussed in the Cabinet paper on privatisation. The white paper further stated that the Government approach reflects a trend which is becoming national and is common overseas. The document went on to state, under the heading "Action Plans by Public Sector Organisations", that chief executives of State organisations are to develop action plans for the systematic review of all areas of their organisation for opportunities for market testing and contracting, and that these plans are to be reflected broadly in each organisation's corporate plan and reported on in annual reports.

The Cabinet document listed, in attachments, privatisation policies and approaches. The first, under "Purpose of the Proposal", was to establish the objectives and principles that should underlie the Government's approach to privatisation of government businesses. The second, under "Recommendations", was that sale proceeds would be applied to reduce Government debt and other liabilities. The document mentioned preparation of a further program of review of possible privatisation of government trading enterprises by the Government Trading Enterprises Reform Committee, in consultation with Ministers in relevant portfolios, for approval of the Cabinet.

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A white paper setting out the Government's privatisation policy, objectives, principles and process to be followed is to be prepared. The draft white paper also states that application of sale proceeds would reduce government liabilities, and that privatisation of government businesses essentially involves conversion of one asset, equity, into another, cash. Accordingly, it would be misleading to show the proceeds of the sale in the Budget as a normal receipt item. For this reason proceeds from the GIO sale were shown as an extraordinary item that did not directly affect the result of the Budget. Similarly, the document states it would be financially irresponsible to utilise proceeds to finance unsustainable recurrent obligations even in the form of increased current outlays or reduced taxation.

Finally, the document lists a whole range of Government enterprises which it proposed to put on the market in 1994-95. Included in that list, with the Forestry Commission and the Snowy Mountains Hydro-electric Authority, were the electricity generators. According to this document, under the preconditions of privatisation and current status, Pacific Power was established with three separate generating business units and a separate transmission function. An experimental spot market in electricity is being tested, according to the document, and a 1994-95 timing was mentioned as the earliest for the generating company. It was estimated that the proceeds from the program would yield $2.3 billion to $3.1 billion. The document also stated that budget impact was largely neutral in view of the high dividend yield and the level of return being generated in assets.

Can there be any doubt after reading that Treasury Cabinet document that the Government's privatisation agenda is clear for all to see. The Minister will state, as I know he will, that the Government has no intention to embark upon a fire sale or asset sale of the electricity generating or transmission systems of this State. However, I do not believe those assurances can be accepted, much as I accept the word of the Minister. Frankly, it will not be his decision; it will be a decision of Treasury and of the Premier when it comes down to the line. They will decide, in the interests of their budget strategy, to sell off these assets. The management of the Electricity Commission was unaware of the proposals until the Opposition released these documents. Ross Bunyon, General Manager of the Electricity Commission, had this to say in a circular of 1 October 1993:

I refer to a recent circular in the CFMEU re: privatisation, purporting to have extracts of a NSW Treasury minute concerning privatisation of Pacific Power. I wish to advise all staff that I have discussed this with the Chairman and am able to confirm that, as far as the Board of Pacific Power and Senior Executives are concerned, we have no knowledge of this matter.

In addition, the Minister has indicated to the Chairman that there is no consideration of privatisation of Pacific Power by the Government at this time.

The circular also states that "it is important that we continue to work together". There it is. Even the general manager of Pacific Power was unaware of this agenda of the Government for the sale of Electricity Commission assets. Undoubtedly, the need for revenue is the basis of the Government's strategy to sell off the assets of the Electricity Commission exactly as the Liberal Government in Victoria is doing across the border. The agenda is basically an ideological one but it is also driven by the urgent need to gain as much revenue as possible. That agenda has direct implications for the bill.

The Minister referred to my Address-in-Reply speech. I did say, and I stand by it, that the Opposition supports the separation of transmission from generation. The Opposition supports that worthwhile initiative, but supports it conditionally. The first condition is that the separation does not lead to a privatisation agenda. The second condition is that the rights, benefits and privileges of employees must be preserved with any transfer of assets and with the establishment of a subsidiary company. The Minister and previous Ministers have dealt with the Electricity Commission over the years. The difficulty in dealing with that body is that a culture of resentment of intrusion by Parliament or government in the operations of the Electricity Commission has developed. The commission believes that its job is to generate electricity and that Ministers, Parliament and anyone else should keep their noses out of the commission's business.

I recall former Minister Peter Cox being deceived by the then general manager of the Electricity Commission when it came to the operation of the Ravensworth coal washery. The Minister unwittingly and unknowingly got up in this House and misled the House and he had to apologise for that. It was not that the Minister knew he had misled the House; he simply relied on information that was given to him by the then management of the Electricity Commission. I will not delay the House unnecessarily; I simply emphasise the point that I believe the same thing has happened with the answer that I got to the question that I directed to the Minister recently about a coal plant at the Liddell power station.

In the Minister's response, obviously based upon information supplied to the Minister by the Electricity Commission, there was reference to this plant. I had said it was a $34 million plant, and the Minister said it is a $31 million plant. My understanding is that the company concerned - Multicon Engineering Pty Limited - is claiming $7 million in extra payments to compensate for delays in building the plant and modifications to correct faults in the plant design. This will mean that the cost will go well beyond the figure that I talked about.

In my question I mentioned the interruption of normal coal supplies. In his answer the Minister said that the interruption of coal supplies to Liddell power station was not attributable to the failure of the plant
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but rather to the coal strike. The fact is that Liddell power station is coaled directly from dedicated mines which operate on a Monday to Friday basis only. During public holidays, weekends, et cetera, mines conveyer maintenance is performed and coal can only be taken from the station stockpiles. The Liddell stockpile is used as the normal and only source of coal when mines are not operating, and that is approximately 30 per cent of the year.

The coincidence of the coal miners strike had nothing to do with the fact that the plant cannot operate during wet weather periods. Only small amounts of rain - in January 50 millimetres - were sufficient to put the station out of action. Bayswater power station has a three-day, covered dry storage area, but it has been affected by wet coal problems when rain has continued for several days. There have been nine further incidents of rain or mechanically based coal plant failures since January which have forced load reductions on the power station. I will refer to some of those.

Mr West: On a point of order: I am loath to take this point of order because I fully appreciate the point that the honourable member is making. But this is enabling legislation to establish subsidiaries within Pacific Power. The matters now being referred to by the honourable member were raised in question time in the last sitting week, and they are the subject of an answer that I gave the honourable member at that time. Those matters have nothing to do with this bill. I appreciate that the honourable member is saying, by way of example, that the advice of Elcom management and others cannot be accepted. However, his remarks go beyond that evidence. I believe he is now trying to debate the information given in response to his original question and is not part of this legislation.

Mr Rogan: On the point of order: I did say when referring to the question and answer that they indicated the type of culture within Pacific Power. I was using this as an illustration and as a lead-in to the general debate upon the legislation to which I will be shortly referring. My reference was to be very brief; I did not intend to go into much detail, much as I would like to. I have about four pages of information to relate to the House, but I would not like to incur the displeasure of the Chair or the Minister by going beyond the scope of the bill.

Mr ACTING-SPEAKER (Mr Hazzard): Order! The legislation before the House is fairly limited. It relates to the establishment of subsidiary companies so that the Electricity Commission can operate its various activities through those subsidiary companies. The honourable member has said that he will not be seeking any further indulgence from the Chair. On that basis, provided he returns to the bill, the matter may proceed.

Mr ROGAN: Naturally, as always, I accept your direction, Mr Acting-Speaker, and I shall not refer to the document further. I simply want to place on the record that there is a rebuttal of the response given to the Minister by Pacific Power. I would have liked the opportunity to refer to some of it in my speech, but I shall abide by the directions of the Chair. The Electricity Commission has had a very bad history of lack of consultation with its work force. The people directly affected, through their representatives, their unions, have not been once called upon to give any indication of their views on this legislation - legislation which will have a direct impact upon their careers, their futures and their job security.

One would have thought that the importance of this legislation to them would have prompted Pacific Power to consult them on the preparation of this legislation. Regrettably, this is part of a sorry saga of the Electricity Commission's failure to consult their work force, and the Electricity Commission has been the subject of criticisms by the Industrial Commission for that failure. I recall the Newvale colliery inquiry and my raising this point about consultation with the Electricity Commission. The commission told me, "We do consult. We brought the unions in and told them what was going to happen". I had to remind the management of the Electricity Commission that bringing someone in and telling them something is not consultation. Consultation means that you seek the views of other people and you seek to have them involved in the decision-making process. If there had been consultation in relation to the Ravensworth coal washery, perhaps it would have been operating today; it may not have been closed down. I now refer specifically to the provisions of the bill. I give notice of the amendments that I will move. I will not detail them now. New section 8B, to be inserted by schedule 1 to the bill, relates to the subsidiary companies and the establishment of these subsidiary companies. New section 8B(2) states:

For that purpose, the Commission may, with the approval of the Minister:

(a) form, or participate in the formation of, a subsidiary company; or

(b) acquire an interest in a company so that, as a result of the acquisition, the company becomes a subsidiary company.

There is concern that this legislation does not refer to a transmission subsidiary company. It is all embracing. What it really means is that any subsidiary company can be established. Indeed, the Minister referred in his second reading speech to this as enabling legislation, which it is. It enables subsidiary companies to be established. Any number of these subsidiary companies can be established and, given the secret agenda - the privatisation agenda to which I referred earlier - there is nothing to stop Hunter Electricity from being hived off the two northern power stations as a subsidiary company. That would be a precursor to the ultimate privatisation and sale of those valuable assets of the State. There is no doubt that if this legislation is passed in its present form, that track will be proceeded down.

Because of those concerns and fears, the Opposition will move that before the establishment of the subsidiary company a regulation must be prepared
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which will require at least parliamentary consideration of the regulation, if not parliamentary approval. At the appropriate time the House could, if it so wished, disallow that regulation. In other words, the Parliament would have control of the most valuable assets in the State and of the government trading enterprise with the greatest revenue stream of all government trading enterprises. Therefore, it is appropriate that Parliament should have some oversight and control in the process. Accordingly, the Opposition will propose that an appropriate amendment be made to that section of the legislation. Schedule 1 will insert a new section 8B(3):

The Commission must not, without the approval of the Parliament, sell or otherwise dispose of any interest in a subsidiary company . . .

I foreshadow that the Opposition will seek to have parliamentary approval of the process of any sale or disposal of the assets of these subsidiary companies. The Minister has stated in this House and publicly that it is not his intention to sell off any of the assets of the subsidiary company at this time. I must accept that. The Minister is an honourable man and I have no reason to dispute what he said. This legislation will go beyond this Minister and perhaps beyond the Premier - heaven forbid that they are re-elected next March. The Opposition will move in Committee to ensure the parliamentary oversighting of any disposal of the assets of the subsidiary company and accordingly I foreshadow that the Opposition will move an amendment to that part of the legislation.

I now deal with new section 8B(3). The Opposition will move to delete that part of the section which reads, "so that, as a result of the sale or disposal, it ceases to be a subsidiary company". It is the Opposition's fear that if it is not deleted about 49 per cent of the assets could be sold off, but would still comply with the general provisions of the clause. Further, dealing with the application of certain provisions to subsidiary companies is a new section 8E, which provides that certain sections of Acts referred to in the new section will take effect when the bill is enacted.

There are no freedom of information provisions referred to in the bill. This concerns the Opposition and it should concern the Parliament. It is a move by the Electricity Commission to avoid oversighting by the establishment of the subsidiary company. The Electricity Commission is currently subject to the freedom of information provisions under the Electricity Commission Act, but under this bill it would not be subject to those provisions. The Opposition believes the Freedom of Information Act should apply and accordingly will move to amend the bill to have those provisions apply. It has been a general principle, when introducing legislation, for example, on Sydney Electricity and the Electricity Commission, to provide for the appointment of an employee-elected representative on the boards of those organisations.

The Opposition does not know what the structure of the subsidiary company will be, but it wishes to maintain the worker-elected representative on the board. European nations, which have the best performance in the world economy, have found there is great merit in involving employees at board level of companies. This principle serves two purposes. It enables a flow of information from the factory floor to the board of the organisation, providing board members with a better understanding of the mood, the feeling and the general direction at which the people at the factory floor level want to operate. Second, the employee-elected representative knows the general direction of the board members and therefore can convey that attitude to the work force. This valuable, two-way process is a process in which the Opposition firmly believes. Accordingly, it should be provided for in this legislation. The Opposition will move an amendment to provide for the appointment of an employee-elected representative.

The last matter of concern to the Opposition is the transfer of staff and the rights, conditions and benefits currently enjoyed by those staff. The bill provides some protection of the rights and benefits of employees. It goes so far but it does not go far enough when it comes to all the rights and benefits that these employees currently enjoy. For this reason the Opposition will move an amendment to seek to preserve the benefits, certainly until the Minister has indicated that it is the intention of the Government, at a later time this year, to introduce legislation that will completely separate the transmission company from the Electricity Commission.

Later this year, or at some time during the budget session, the Opposition will examine in detail legislation that contains provisions about employee rights and benefits, working conditions and the like. The Opposition would like the legislation to contain a provision to ensure the protection of those rights and benefits. If a subsidiary company is privatised or goes broke, would Pacific Power have any responsibility for redundancy payments or redeployment? In England, some years after companies were privatised, services were discontinued and employees had nowhere to go. Transfer of staff provisions are specified in proposed new section 8F. Pacific Power employees can appeal to bodies such as the Government and Related Employees Appeals Tribunal. No provision in the proposed legislation states that employees who will be transferred to the subsidiary company will have any right to appeal to GREAT.

Another organisation, Manual Operation Procedures, deals with many matters that are not included in awards. It appears that only employees who have been transferred and not new employees will be entitled to paternity leave. I could refer to other appeal bodies to which employees would have a right of appeal, but they may not be entitled to appeal to those bodies if they are transferred from Pacific Power to the subsidiary company. The Opposition will move an amendment at the Committee stage that will seek to ensure that those employees are redeployed on secondment for the duration of the establishment of the subsidiary company. All their rights, benefits and conditions will continue; they will merely be seconded.

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As I said earlier, the appropriate time to look at all the other conditions to which Pacific Power employees are entitled will be later this year when the House is dealing with specific legislation to establish a separate authority. I reiterate that the Opposition wishes to try to prevent any privatisation agenda. The Opposition is seeking parliamentary oversight of the necessary transfer of any assets and the possible sale of the assets of this great organisation. I do not believe that any fair-minded and reasonable member of this House would object to that. For those reasons the Opposition will move amendments in Committee.

Mr NEILLY (Cessnock) [9.25]: I agree with the amendments foreshadowed by the shadow minister, the honourable member for East Hills, to the Electricity Commission (Amendment) Bill. The object of this bill is to enable the Electricity Commission to establish subsidiary companies using existing structures of mining operations associated with the Electricity Commission. The Government is entitled to dispose of those structures without recourse to the Parliament. Honourable members know what the group of Elcom companies is like, as we dealt in recent years with sales that have occurred and sales that have been proposed. Inquiries were conducted by a select committee into the proposed sale of Newvale without the involvement of the Parliament.

I would have preferred it if this legislation established subsidiary corporations rather than subsidiary companies. That option is still available to the Electricity Commission. Reference has been made to the reasons behind this legislation. This legislation is a lead-up to the establishment of a national grid. If my memory serves me correctly, in late 1983 or early 1984 the McKinnon report dealt with the shortcomings of the Electricity Commission. It dealt not only with the supply of resources to the industry but also with the problems regarding the generating capacity of industry and, to a lesser extent, the problems associated with grid distribution. I was interested in that report because it referred to access to resource material, such as coal, for generating purposes. The report stated that this could be accomplished more efficiently.

When that report was released it invited responses. I responded to the then Minister of the day, Mr Terry Sheahan, and I advocated the establishment of a national grid. I was interested in ensuring that the people I represented continued mining coal. These days it would cost about $7 billion to build a power station. Economically, it would be common sense to save that sort of money. I took into account the time frames in different States. The power generating industry is about providing power during peak demand periods, which inevitably occur in winter. Back in those days I recall addressing the men at Huntley Colliery and the men at Tallawarra power station. After addressing those men I went to the office of Terry Sheahan and expressed views about how the generating industry should operate.

I can still recall a commitment given by the coalition parties, before they came into office, that Tallawarra power station would remain in operation. Within months of being elected to office the Liberal-National Government broke that promise. The Government made a commitment in regard to Tallawarra power station and the establishment of subsidiary organisations. I do not believe that people in the industry will swallow assurances from this Government. The industry has already been bitten. Once bitten, twice shy. In the latter part of the 1980s and the early 1990s the Federal Government hopped on to the national grid bandwagon and issued a document entitled "Issues and Energy Policy, an Agenda for the 1990s", which was published in June 1991. That document was a lead-up to the legislation with which we are dealing tonight. A lot of good things were espoused in that document. I wish to refer to a few of the comments in that document. One comment was under the heading "Pricing problems":

State based approaches to energy related regulation can add to inefficiencies. State government responsibility extends to, for example, regulation of environmental and safety standards. If controls are not imposed uniformly in each State, they could create de-facto interstate barriers to the free movement of energy resources.

My understanding of this bill is precisely that. The Federal Government at a meeting of the States said it wanted a structure of uniform competitive standards and substandards within each State so that they could participate in an appropriate fashion to supply the national grid. The document, under the heading "Improving the outlook for the industry in the 1990s" stated:

An Industry Commission inquiry into energy generation and distribution has highlighted the major efficiency gains which could be derived from greater competition in the industry.

It is essential that the process of reform not only continue but accelerate in the coming years. A number of public utilities have embarked on commercialisation or corporatisation programs while several are examining the possibility. Prospects for increased private sector participation in the electricity industry are growing. Western Australia, for example, has announced that its next power station will be operated by a private consortium.

Under the heading "Transmission and grid interconnections", that section concludes:

In an open market for electricity, a short term market price would be established with trading in electricity among a wider set of industry participants, including distribution bodies and private generators. The market price would then reflect the value of electricity as determined by supply and demand.

The first edition of Electricity Supply Magazine dated October 1991 contained a comment by George Bates, the then Chief General Manager of the State Electricity Commission of Victoria. In his comment on matters raised by the Industry Commission at a national level Mr Bates states:

I would agree with the Industry Commission that the industry overall can be more efficient. We said so in our submission to the inquiry.

However, the IC appears to take little notice of the evidence put before them, particularly the achievements of the SECV, or they would have softened the rather draconian

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measures they continue to propose to sell everything off to private industry. This seems to be their solution to everything, whereas there is very little evidence to show that private monopolies in the energy area are any better performers than public ones.

Mr Bates later comments:

The work we have done to establish a commercial climate in the SECV is particularly valuable and our future concentration will be on corporatisation but also particularly on the development of our people from whom our future improvements will derive.

Corporatisation is the message all the way through that document. The bill provides for the establishment of subsidiary companies. As I said initially, the framework or format of those subsidiary companies falls into the same pattern as that in which the State mines were established. That pattern enables this Government to make building blocks out of all the components of the Electricity Commission and flog them off without recourse to this Parliament. To my mind that is not the intent of honourable members on this side of the House. Opposition members would rather there be corporatisation than privatisation to the extent that the Minister has the right to flog off the State's electricity industry.

Why does this bill not provide for a corporatised structure rather than a privatised structure in the establishment of subsidiary companies? The Minister is well aware that the Elcom and Newcom mines are straight-out subsidiary companies with virtually the same format and structure as ordinary private companies. I am concerned about proposed section 8F, which deals with the transfer of staff, because I do not believe that it enunciates appropriately or adequately the entitlements of staff should they transfer from one subsidiary company to another. Honourable members are entitled to know whether there will be a status quo in relation to current salaries and benefits or whether when a transfer occurs there will be a time limitation so that following transfer they will have diminished salaries or entitlements, or a combination of both.

Proposed section 8B(3) provides that irrespective of the structure of the building blocks of the different companies and how they are put together, whether in a grid pattern or a structure consisting of different generators, the Minister will be able to approve the selling off of any asset of the company. The description "any asset" does not relate to the type of structure it might be, whether corporatised or privatised in the context of a private company. The Minister has a right to authorise the sale of anything. No one is worried about small things associated with the Electricity Commission but when it comes to items of magnitude such as power stations, I believe that any prospective sale should have to be ratified by this Parliament. I do not discount the fact that a situation could arise in which the Opposition might think that a sale was desirable, but ultimately this Parliament should have the responsibility of making that determination. I do not necessarily rubbish the bill but I believe protections ought to be built into it, and those protections have been highlighted by the shadow minister. My support for the bill depends largely on acceptance of the amendments foreshadowed by the shadow minister. The amendments are pertinent to ensuring that the Parliament has a say in the disposal of any public assets.

Mr BOWMAN (Swansea) [9.38]: My reservations about this bill are similar to those of other Opposition members who have spoken in this debate. Basically they relate to a concern expressed by many constituents that enabling legislation may allow things to occur that would be contrary to their interests, though they may not necessarily be foreseen at this time. That might sound like mindless conservatism but the rate of change of microeconomic reform, which is frequently underestimated in Australia, has left many people disadvantaged, though considerable advantage may accrue to many people in the community. Many people have found themselves unemployed or doing a job that is much less satisfying or pays less than one they had previously. They may not have always been aware of what was about to happen to them and felt that insufficient provision had been made for a reasonably smooth social as well as economic transition from situation A to situation B. Because of these concerns expressed by many constituents, Opposition members are anxious to ensure that the proposed amendments are given serious consideration by the Government and hope that they will be accepted so that there can be enthusiastic and wholehearted support for the bill as amended.

We are not by any means unhappy about the idea of greater efficiency; indeed, we recognise fully that if New South Wales and Australia are to continue to make economic progress we cannot stand still. A national electricity grid is fully in keeping with the ideology of both sides of the House. However, there are, if not suspicions, fears aroused when there does not appear to be provision for freedom of information procedures and the appointment of an employee elected representative to the board. There should be a partnership mode of management whereby the employed join in a co-operative approach to deal with potential problems of change. The protection of transferred workers' rights and conditions has been affirmed as the intention of this enabling legislation. I do not for a moment question the good will or integrity of the Minister concerned. Under the heading of "Transfer of staff" proposed section 8F(2) reads:

The awards, agreements and determinations applying, immediately before the order takes effect, to such members of the staff of the Commission continue to apply to each member of the staff concerned until other provision is duly made.

When that provision might duly be made is a matter of concern and anxiety to people who work in power stations in my electorate and in mines which largely supply contract coal to power stations. It is understood that, in the establishment of a national electricity grid, efficiencies will not be achieved without short-term disadvantages to some. There is a great, and I think very reasonable, concern that these
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be minimised and that any consequent difficulties or disadvantages be shared as equitably as possible. Whatever one thinks of the particular proposal of the national Government, it has decided that something has to be done so that the long-term unemployed do not become a permanent underclass in the Australian nation. There is a fear that some of the people dislodged from their positions by the rapid rate of reform in the electricity generation and transmission industry might join the ranks of the long-term unemployed if the process is not managed with that danger in mind.

We think it reasonable that parliamentary approval be sought for the establishment of each subsidiary company. We do not believe that would hold up the process unduly. With all due respect to the Minister, we think it more appropriate and likely to create a greater sense of security and co-operation in employees if Parliament rather than the Minister approves of any sales. I am sure the Minister will consider these proposals and I hope he will accept the foreshadowed amendments. I believe they will not frustrate the intention of the Government. To be fair, if a national competitive policy for the electricity industry is to be implemented the Government has to set up this structure. The people involved often have only a dim understanding of what the process is all about, but have a full understanding of how they would be living if they were disemployed by the process. They are more likely to be co-operative and to make the transmission smooth, and ultimately more effective, if they feel secure.

I accept the good will of the Minister. I ask him earnestly to consider the foreshadowed amendments. I believe that any slight inconvenience caused to administration by the acceptance of the amendments could be easily coped with by the Minister and the department. Acceptance of the amendments would mean that those working in the industry who fear that their futures might be impaired by the process of change, however necessary, would be much readier to co-operate, and other people in the community who may suffer collateral damage from a rate of change socially difficult to adjust to, however economically efficient it might be, would also be very grateful for such consideration.

Mr HUNTER (Lake Macquarie) [9.46]: My comments will be brief. I do not want to be accused of trying to impede the progress of the bill. The Opposition holds grave concerns about certain aspects of the bill and the actions that certain clauses, if passed, would allow the Government to undertake - and what could occur. The object of the Electricity Commission (Amendment) Bill is to enable the Electricity Commission to establish subsidiary companies. It will enable the transfer of Electricity Commission assets to a legally separate network subsidiary. The governments of New South Wales, Victoria, Queensland, South Australia, Tasmania and the Australian Capital Territory, and the Commonwealth Government, have agreed to put in place the necessary structural changes to allow the implementation of a competitive electricity market in southeastern Australia from 1 July 1995. The Opposition does not oppose this. However, this amending bill is enabling legislation pending a detailed bill foreshadowed during the budget session to establish the grid subsidiary company as a statutory authority. The Opposition has concerns about a number of aspects of the bill. An amendment will be moved to require parliamentary approval for the establishment of each subsidiary company. Proposed section 8B(2), under the heading, "Subsidiary companies", states:

For that purpose, the Commission may, with the approval of the Minister:

(a) form, or participate in the formation of, a subsidiary company . . .

The Opposition believes that is a move towards privatisation of the Electricity Commission by the backdoor. The Opposition will move amendments to provide for the matter to come back to the Parliament for debate and approval. In view of the move to privatise a large section of the Electricity Commission the Opposition will also move an amendment which will provide for the Parliament, not the Minister, to approve sales. Another amendment will provide that the subsidiary companies will be subject to freedom of information provisions. The bill provides for the subsidiary companies to be treated as public authorities, and the Opposition believes that public authorities should be subject to freedom of information provisions. Another amendment will provide for an employee elected representative to be on any board of such a subsidiary company. Again, public authorities should have a worker representative on the board so that the workers' feelings and beliefs are transmitted directly to the board.

The final amendment the Opposition will move will protect the transferred workers' rights and conditions, such as access to the Government and Related Employees Appeal Tribunal. Before being elected as a member of this Parliament I worked for 11 years with the Electricity Commission and had the opportunity to use GREAT. The tribunal is important to all workers within the Electricity Commission. Access to the tribunal is a right that workers should have protected and that right should be transferred to the subsidiary companies. The Opposition will move an amendment to that effect. The Opposition is not trying to frustrate the progress of the bill but it has a number of concerns about certain aspects of the bill. I ask the Minister to heed our concerns and agree to the amendments proposed by the Opposition.

Mr GAUDRY (Newcastle) [9.50]: I also ask that the Minister take careful note of the amendments proposed by the Opposition. The Opposition accepts efficiencies being brought into the electricity industry and accepts the concept of a national grid. In fact, the Opposition envisages positive benefits flowing from those changes. However, Opposition members are concerned that some moves by the Government could facilitate privatisation of part or all of the electricity industry. I bring to the attention of the House concerns brought to me by the CFMEU, which represents members in the electricity industry, about the direction being taken by the Minister and the
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Government. Though the bill appears at first glance to be brief and unobtrusive, nevertheless it has a sting. A letter dated 2 May from the CFMEU states:

The Minister's second reading speech emphasises that the Bill will enable the creation of a separate transmission company, in line with agreed aspects of electricity industry reform.

I have already referred to that and to the acceptance of the national grid as a positive initiative. The letter continues:

In fact the Bill enables the establishment of any number of subsidiary companies in the Electricity Commission (Pacific Power).

Under the guise of implementing agreed aspects of industry reform, the Government is seeking to put in place legislation that will:

* further the Government's privatisation agenda,

* allow the Minister and Pacific Power to restructure a multi-billion dollar public organisation without any need for recourse to Parliament;

* allow implementation of non-agreed aspects of industry reform without Parliamentary oversight; and

* irrevocably divide Pacific Power and its workforce.

This demonstrates the genuine concerns of the work force, which has been undergoing significant change, and not all workers are in agreement that the change has been positive. I refer to the 1994 edition of Electricity Supply and an article from Ross Bunyon, the General Manager of Pacific Power, referring to the gains. This document demonstrates comprehensively the positive gains in Pacific Power and the need for redundancies and contraction of the work force. The article is couched in neat economic jargon. It states:

The focus has been on team building, upskilling and meaningful work with emphasis on quality and customer service.

That is positive and good. I have taken the trouble to speak with workers in the electricity generating industry. They have expressed genuine apprehension about job security and the privatisation agenda. I wish to refer to some comments that have been made to me. It is felt that a massive difference exists between the people who run the organisation and what actually goes on in power stations; that some of the changes are destroying effective team work that has always been an integral part of the power industry; that in some cases the change has been without logic and demoralising for the work force. I ask the Minister to consider those concerns and to be sympathetic towards the negative feelings of the work force about the legislation and its potential to hive off sections of the industry. At present I understand that Pacific Power maintenance is hived off and is not counted in the equation for generation.

Mr Hunter: They have hard hats that are bright pink.

Mr GAUDRY: Those maintenance workers have bright pink hard hats and apparently they are kept away and do not fit in at the plant with the others. They are not counted in the equation for competitiveness.

Mr Mills: Pink soft hats.

Mr GAUDRY: Yes, but in effect they are still there. Workers are also concerned about the large amount of contracting out that occurs, and this is not counted in the equation either. The workers have these genuine worries about their future in the organisation and fear that the bill has sinister overtones. I am sure the overtones have been addressed by the honourable member for East Hills, the shadow minister, in foreshadowing amendments. He referred to the privatisation agenda and Opposition concerns. That is not a reflection on the Minister for Energy but once this legislation is passed it has the potential for impact beyond the term of the Minister, and perhaps beyond the term of the Government. It could impact on the future of the industry and its move to privatisation.

I refer to the privatisation paper entitled "Government Trading Enterprises Reform Committee Privatisation Policy, Process and Program". That is a Cabinet document and expresses views on electricity generators. Obviously Pacific Power was being set up to parcel up the industry potentially for privatisation. The legislation provides the potential for setting up a whole range of business enterprises within the present structure as subsidiary companies and could easily lead to those being sold off to the private sector, with consequent problems for the operation of Pacific Power and problems for the work force.

I shall refer to the preconditions for privatisation. First, it was pointed out that Pacific Power has been established already with three separate generating business units and has a separate transmission function. Of course, that refers to the Central Coast - the Eraring, Vales Point and Munmorah power stations; the Hunter group - Liddell and Bayswater power stations; and the Western group - Mount Piper and Wallerawang. Those power stations are all operating in a competitive environment but according to workers not all of the equation is as appears in reports. Second, a further precondition is that experimental spot market in electricity is being tested. I understand that is taking place, and also I refer to the national grid. The Opposition accepts and understand the economic rationale for the national grid and the need for all of Australia to be competitive in this area. That says that prior to privatisation full separation of transmission systems, possibly with a separate authority, will be necessary. One of the objects of the bill is to fully establish an electricity market and then create commercial boards for the generating subsidiaries. That object of the bill is achievable, given clear controls.

Previous speakers have outlined the Opposition's approach to ensuring an effective level of control. Ministers do not have an unfettered right to make changes to the organisation outside the scrutiny of Parliament. Such proposals are subject to the scrutiny of the Parliament so that workers rights can be protected and freedom of information provisions applied. Members opposite are urging that this matter be proceeded with immediately. The Parliament must
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have control of any changes that occur, workers' rights must be protected, and scrutiny through freedom of information must be included in and not omitted from the legislation.

Mr MILLS (Wallsend) [10.2]: As I address the bill I am reminded of the French saying "C'est le ton qui fait la musique", which means in effect that it is not quite so much the song you sing but how you sing it. That is a relevant consideration in approaching the bill. For once I am pleased to be able to say that the Minister for Energy has introduced a bill that is broadly in accord with Labor Party policy. I quote Australian Labor Party policy 1993-94 page 31, section 5.6.1, in relation to the Electricity Commission:

A Labor government will:

. . .

(e) encourage more speed into micro economic reform initiatives such as:

(i) interconnection-development of Eastern Australia grid linking New South Wales, Queensland, Victoria, South Australia and Tasmania;

(ii) fair and equitable tariffs for consumers.

Section 5.7.2(viii) states:

National Electricity Transmission Grid

Press for the full implementation of a National Electricity Transmission Grid. . . .

We are in accord. The Minister and the Opposition know that, hence my introduction to indicate that the Labor Party is broadly in agreement with the State Government and with the Federal Government that a grid of this kind and facilitating legislation are needed. We agree with the song, but the way we sing it may be a little different. Hence the amendments that the Labor Party will move in Committee. Microeconomic reform is dealt with in Labor Party policy. One of the first so-called microeconomic reforms of the Liberal Party-National Party under former Premier Greiner was a promise to keep the Tallawarra power station open. However, within a few months the Government had closed that power station, and at the Huntley mine, where the honourable member for Keira used to work, 500 jobs were lost. The former Agent-General and former Minister suffered a significant loss of credibility over that issue. We do not need such microeconomic reform. I trust that will not happen when the bill is passed. We have to be careful about that. The Opposition is proposing amendments in relation to the way the bill goes about the task that it sets out to achieve.

I, like my colleagues - because I live among those who work in the power and coalmining industries in the Hunter region - have consulted with friends who have looked at the issues arising from the bill. The Minister, in his second reading speech, referred to the transmission assets of the Electricity Commission trading as Pacific Power transferred to a legally separate network subsidiary, and said that was an integral part of ongoing microeconomic reform of the electricity supply industry in New South Wales. The Minister also complimented the honourable member for East Hills who gave a commitment on behalf of the Opposition to legislation to enable the national group to be established. To this end it was proposed to create the legally separated transmission element within Pacific Power by 1 July, that being the initial step towards formal separation of Pacific Power's transmission and generation businesses.

The Minister also said in his second reading speech that the bill requires that all customers and generators of a certain minimum size have guaranteed access to the wires network so that trading can take place. One of the concerns expressed by the rank and file quite independent of any of the unions or any of the official groups - just ordinary working people expressing their opinion on what these things might mean - was that minimum size requires fairly careful consideration because it could exclude small suppliers with excess supply which is supplied cheaply. That was one of the comments made to me and I refer it to the Minister. The Minister in his speech talked about the bill including a provision for the transfer of staff to a subsidiary company.

The Minister drew attention to proposed section 8F, ensuring members that staff transferred to a subsidiary company will not have their working conditions, superannuation, salary or any other benefit altered. My friends to whom I spoke last weekend said that could run into inter-union and award problems such as State and Federal problems, and seniority on-site problems. This sort of concern is reflected by the people who work in the industry, with concerns expressed the way in which the bill might be implemented. I refer to page 3 of the bill, schedule 1, proposed section 8B(3), which provides:

The Commission must not, without the approval of the Minister, sell or otherwise dispose of any interests in a subsidiary company so that, as a result of the sale or disposal, it ceases to be a subsidiary company.

The comment was made that we really ought to have an Act of Parliament on that matter and that the Minister alone, that is, the commission and the Minister working alone, should not have the power to sell off. That comment came genuinely without referral to Labor caucuses, shadow ministers, the unions or anyone else. That comment came straight from the mouths of people who work in the industry. Finally, I refer to page 5 of the bill, under the heading "Transfer of Staff", and to proposed section 8F(1), which provides:

The Minister may by order transfer the employment of specified staff of the Commission to a subsidiary company.

The comment of the employees - and they cannot be blamed given the record on microeconomic reform and how it has been pushed in this country - to me was, "That could be misused to disadvantage employees. That is a good way to get rid of people you do not like". I relate that to the House as a considered comment by friends of mine who work in the industry. I like to relate proposed legislation to
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people in the electorate I represent so that I can get genuine feedback from my constituents. I acknowledge the submission I have received from Damian O'Connor on behalf of the Mining and Energy Division of the Construction, Forestry, Mining and Energy Workers Union - the CFMEU. Parts of his letter, which went to other members of Parliament, have been quoted already. One sentence of that letter is relevant to the nature of the amendments that the honourable member for East Hills proposed to move in Committee. It states:

In fact the Bill enables the establishment of any number of subsidiary companies in the Electricity Commission (Pacific Power).

Mr O'Connor - who is present in the public gallery tonight - said to me that the terms of the bill are far too wide, hence the nature of the amendments that will be moved by the Opposition later tonight. While the Opposition supports the general thrust of the bill, it is important to recognise there are amendments that it intends to move that will change the direction of the bill to enable it to be very wide ranging rather than pretending to be specific. The bill states that one of its objects is to facilitate the establishment of a national grid by establishing various companies. But the Government could, if it chose - and it may well choose - go beyond that to dismember the Electricity Commission and break it up into little pieces, to privatise various bits and corporatise other bits, to divide groups of workers into different parts of the commission. The Government could well lose the plot in the end and spoil the whole way the commission has gone about the process of managing the electricity industry in New South Wales. I commend the thrust of the bill and, more importantly, the amendments that will be moved in Committee.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [10.10], in reply: I thank the honourable members opposite for their contribution to this debate tonight. Because of the late sittings last night I did not wish to prolong this evening's proceedings and, therefore, I did not seek speakers from my side of the House. But I do realise that the Opposition members who have spoken in this debate come from electorates many of whose constituents are employees of the Electricity Commission. In that regard, they had a considerable sense of obligation to raise matters of concern. I place that acknowledgment on the record.

The honourable member for East Hills in his speech to the Address-in-Reply debate indicated on behalf of the Opposition that there would be no opposition to these reform measures. I was rather bemused, however, that the honourable member for East Hills suggested that many of these reforms were well under way in the days when Peter Cox was the Minister for Energy.

Though I have not been in the portfolio all that long - however, I understand that I am one of the longest serving Ministers on this side of the House to have held the portfolio - I have come across quite a number of people in the industry who were not all that enamoured with some of the reforms that Peter Cox was undertaking. The recollection of distributors with regard to Peter Cox, and for that matter the Wran administration, is that distributors were used as a milch cow. They were being robbed blind. Every time the Labor Government wanted a few extra dollars it would go straight to those major distributors - Prospect, Sydney Electricity - and, of course, that caused major havoc.

Nowadays the Electricity Commission, which is now called by its trading name Pacific Power, is the eighth largest trading company in Australia. That is to the credit not just of management but to the credit of employees at all levels of the commission. I say that with considerable pride. When Peter Cox was the Minister responsible for the management of the Electricity Commission the company was working at a loss - not a record that one could be proud of. Today that same company is making a return on an asset owned by the people of New South Wales, and that return is contributing to other important areas such as welfare, health services, education, et cetera - right across the board.

I know that there will be members opposite who will say, "Oh yes, but of course you did that by an increase in the BST". If that is the case, why is it that domestic consumers today are paying less for electricity than they were a decade and a half ago? I do not deny the very active role that the ALP in this State played in the important development of this particular organisation in its formative years, at a time when there was a disparate group of generators, a disparate group of distributors, no co-ordination, and no sense of direction. Common sense has prevailed and the groups have been brought together with a common sense of purpose to develop the supply of electricity for the people of this State.

It is important that we remember that part of history. It is also important that we move on and look to the future. I suppose many of those looking to the future are saying, "What we are being told is that at the end of this tunnel is a national grid". I would say in this Parliament, without fear or favour, that a national grid will not work unless Queensland is a part of it. New South Wales has a surplus of generation beyond what is required to meet even reliable and safe standards. Victoria is in a similar position. South Australia is a net purchaser and it seems to have some very cosy arrangement with Victoria. Queensland is in the position of having to consider extra generation capacity. It has recently announced that it is considering taking some generation plants out of mothballs to bring them back on line. That does not engender much hope or confidence. I still live in hope, however, because I believe there is a very strong desire on the part of many to push ahead and achieve - and that is the purpose of the national grid. The Business Council of Australia contends that a national grid will bring about competition, and competition necessarily brings about lower prices. Some might say that I am a little hypocritical but I believe that the Government Pricing Tribunal in New South Wales is achieving more in
Page 1930
terms of reducing prices, far beyond what could ever be expected through the introduction of a national grid and a competitive market, because I believe it is going about it in a proper and orderly way. At recent meetings with representatives of the Business Council of Australia they have told me that Victoria is operating in a wonderful way - that Victoria is leading the way.

I happen to believe that New South Wales is leading the way. I have said all along that I am about getting the structures right. I do not want to rush things through and make a mess of it. I want to be able to sit back when it is all over and say that we got it right and that at the same time we have delivered real reductions to electricity consumers - not only to the domestic consumers by freezing domestic prices, but also to the commercial and industrial consumers of this State. The Industry Commission, in its report of 1991, came out with the grand statement: "We have a very inefficient electricity industry right across the east coast of Australia. We need to bring about change, we need to bring about efficiency and reform, and these are all the gains that we can make".

Mr Rogan: I disagreed with it.

Mr WEST: The honourable member for East Hills says that he disagreed. I do not want to get into that part of the debate; I simply want to say that the sorts of gains that the Industry Commission report indicated could be made have been made by the Electricity Commission throughout its entire organisation, throughout the district network and beyond. The Government has made these changes. The Government is on the positive side of the leger already. It is something of which we can all be proud.

I have had the opportunity to visit coalmines and generating stations. I have spoken to people in my electorate who work at the transmission level. I look them in the eye - as I can look the management of Pacific Power in the eye - and say, "We have achieved this together". That process is important. There is no hidden agenda in the way in which I have approached this industry. I have said, "Let us make this reform, and let us make it together. Let us look to the future and let us not hijack each other's agenda".

The honourable member for East Hills spent considerable time tonight talking about the secret agenda of privatisation. He quoted at length from a document that was prepared by Treasury. During my time in Parliament I have spent a considerable number of years in Opposition. Opposition members clutch with glee any document that seems to reflect a government opinion. They use it for all its worth. I respect that position, which has been taken in the past and tonight.

Mr Rogan: Actions speak louder than words.

Mr WEST: Indeed. A circular has been quoted tonight from the General Manager of Pacific Power, Ross Bunyon, stating that he knew nothing about the document. I did not know anything about it; the Treasurer did not know anything about it; the Premier knew nothing about it. Why? Because a junior officer in Treasury prepared it. The honourable member for East Hills has been in government; he would know that people in central agencies try to think up ideas - they do not necessarily doodle - to be creative when considering who might be potential candidates within a government framework.

I have examined the document carefully subsequent to the honourable member for East Hills gaining possession of it. I did not see the document until he gained possession of it. The document basically refers to potential candidates should the Government want to follow a certain direction. It does not state Government policy. That distinction must be made. The Government has not undertaken a course of privatisation of the various elements. Consistent with the National Grid Management Council, the Government has said it believes that by entering into this competitive market there is capacity for future private sector investment in the generation and supply sections of the industry. I do not back off one iota.

I do not think we will see the day when the national grid sends sparks across wires all over the States, but it will send very real price signals to future investors in generation capacity. It will not detract from the ability or the capacity of existing generators to find their way in the market-place. The day will come in New South Wales and in Australia, as has already happened in Queensland, when there is a need for additional generation capacity. The time has passed when governments should be investing in generation capacity. I do not agree with governments spending dollars on assets; I would rather the dollars be spent on hospitals and schools - areas that, in the majority of cases, will not be run by the private sector. However, the private sector will and can play an important role in electricity generation. The Government intends to get the structure of the energy organisation right. Reference has been made to what is occurring in Victoria. At a meeting I attended with the Business Council, I asked the council who was involved in discussions in Victoria and who ran the agenda. The clear answer was that the agenda is being run by Treasury. In New South Wales, Treasury does not run the agenda; the Minister for Energy runs the agenda. That is the key difference.

Employees, management, everyone involved in generation, distribution, and supply - the whole industry - is concerned about the number of different models that are evolving around the world. Vertical integration models have been introduced in the United States, a break-up has occurred in the United Kingdom, and recent changes have taken place in New Zealand. None of those models is right for Australia. I say to members opposite and to everyone who is involved in the electricity supply industry in New South Wales: let us get it right for Australia; let us examine the models overseas and use those experiences to get it right for Australia.

Page 1931

The Victorian distribution network could almost fit into the area bounded by Shortland to the north, Illawarra to the south, and Prospect to the west, including Sydney Electricity - leaving aside the 85 per cent of distributors in the remainder of New South Wales. New South Wales and Victoria cannot be compared. We must have a system that recognises our unique setup. In the United Kingdom, when transmission and generation were separated, transmission was privatised and distributors were allowed to buy a shareholding in the transmission. That has been a dismal failure and has not sent out any of the right signals. This is enabling legislation. The first stage will create the subsidiary company within Pacific Power, and the next stage will create a separate statutory authority which will own and operate the transmission assets of New South Wales. There is no hidden agenda. Freedom of information and employee representation, as mentioned by the honourable member for East Hills and other honourable members, are important elements.

This enabling legislation will facilitate the formation of a subsidiary company. Freedom of information legislation that applies to the parent company will apply also to the subsidiary company. Opposition members spoke about employee membership on the board. There is an employee member on the parent company, Pacific Power. Anything that is done by the subsidiary company must be referred ultimately to the principal board. Opposition members spoke also about redundancies. The conditions of employees of the subsidiary company, which will be responsible for transmission assets during this interim process, will remain the same as conditions for employees of Pacific Power. The Government will not take away any of those rights - an important matter in this transition proposal. I said earlier that the Government and I have no hidden agenda.

The honourable member for Wallsend referred to discussions he had with some employees. He referred to my second reading speech and talked about my reference to customers of a certain minimum size, which is part of the National Grid Management Council proposal. Opposition members might be aware that Victorians believe that the 10-megawatt provision should be reduced to 5 megawatts. Victorians want to reduce the number of megawatts because they have so few customers who fall into that category. That matter still has to be discussed and resolved. New South Wales is still analysing that proposal. Principally, the Government believes that the original proposal of 10 megawatts is about right, but it will listen to further argument before it resolves the problem. I thank Opposition members for their contributions. There will be discussion on the proposed amendments. The Government will agree to some amendments but will oppose others because they are wrong in principle. If those amendments are lost, I do not believe that the principles and arguments for which Opposition members have been fighting will be lost in the overall scheme.

Motion agreed to.

Bill read a second time.

Schedule 1

Mr ROGAN (East Hills) [10.34]: I move:

No.1 Page 3, Schedule 1(3), proposed Section 8B(2), lines 9-10. Omit "with the approval of the Minister", insert instead "if authorised by a regulation".

I will not unnecessarily delay the House by explaining at length my reasons for moving this amendment. I covered that fairly well in my contribution to the second reading debate. However, the Opposition is seeking by way of this amendment to ensure parliamentary scrutiny of the subsidiary companies. This enabling legislation will allow for the establishment of subsidiary companies. When they are established the Opposition will seek parliamentary approval.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [10.35]: The Government opposes the amendment. As I said in my second reading speech, this legislation is enabling legislation; it is really about setting up a transmission subsidiary and then moving to a total separation of transmission assets. I indicated earlier that I should like the subsidiary company to be established by 1 July. That company would then have to face the regulation test of this Parliament. The Government will determine later the representatives who will comprise the board that is to be established. The Government could be faced with a situation 15 days after the commencement of the budget session where that regulation is disallowed.

Mr Hunter: It would not be opposed.

Mr WEST: The honourable member for Lake Macquarie has indicated that the regulation would not be opposed. I have indicated clearly that I want to establish a separate board. I want to start identifying assets and I want to start preparing the next stage of the legislation to facilitate separation. Because this has to be done by regulation, we have to go through the regulatory impact statement process. It is a pity that the honourable member for Murrumbidgee is not in the Chamber as honourable members would be aware of difficulties that are faced in meeting the stringent requirements of regulatory impact statements, quite apart from the 15-day rule.

One could go through that process, have all that hanging over one's head and, at the same time, one could be trying to complete the first stage. Even though Opposition members said by way of interjection that they will not disallow this regulation, it is difficult to live with those sorts of guarantees. Opposition members should recognise that this is enabling legislation. I know that Opposition members are worried about privatisation; that is what it comes back to. I make no bones about this: if anything is to be privatised it would need separate legislation, and clearly Opposition members would have an opportunity to debate the matter at that time. The honourable member for East Hills and other Opposition members are placing an unnecessary and undue restriction on this legislation. I do not believe it is as important as some of the other limits that are being sought.

Page 1932

Mr HUNTER (Lake Macquarie) [10.39]: I support the amendment moved by the honourable member for East Hills. I point out to the Minister for Energy that the Opposition has stated quite clearly that it will not oppose the establishment of a subsidiary company for the transmission group. The Minister has been reminded of Australian Labor Party policy in that regard. If during the winter recess the Minister established a separate subsidiary company, that would not be opposed by the Opposition when the Parliament resumed. Why is the Minister going down that path if he does not intend to form a number of subsidiary companies?

The Minister has been dragging the chain. He should have introduced this legislation earlier. A board could then have been established and the 15-day requirement could have been complied with before the Parliament rose for the winter recess. The Minister should not say that the Opposition will oppose the regulation. I assure the Minister that the Opposition supports the separation of the transmission element. If this provision remains in the bill, the Opposition believes that the Government will attempt to separate other sections of the Electricity Commission and establish subsidiary companies, which will lead to partial privatisation.

Mr ROGAN (East Hills) [10.40]: The Minister made a point about the Regulation Review Committee. It is correct that the process must be followed with regulations, however I am assured by the Parliamentary Counsel's office that there is a means by which that can be fast tracked. I would be prepared to give the Minister an assurance from the Opposition that it will co-operate fully with the establishment of the regulation, provided that there is some consultation and that the regulation does not contain provisions contrary to the spirit and intent of the legislation and the concerns put by the Opposition. I emphasise that the Opposition does not want to impede the reform program that has been agreed to by this Government and all of the eastern State governments, certainly so far as electricity is concerned. That type of reform of the transmission system is necessary for this open competitive market which all honourable members support. I give the Minister the assurance of the Opposition that it will co-operate fully to ensure that the regulation is expeditiously executed.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [10.42]: The honourable member indicated that the Opposition would agree with the regulation provided it is not contrary to the bill. I could not make a regulation that is contrary to the bill; it is not possible. Neither the Parliamentary Counsel nor the Government would approve a regulation that is contrary to the bill. There is a lot involved in going through the regulatory impact statement procedure and at the same time focusing on getting the legislation right. I am talking about bringing the next stage of legislation back in the next session to do the full separation. I accept the integrity and direction of the honourable member for East Hills. However, his amendment is unnecessary and would impose an extra condition that will tie up the real intent of this bill. I remain adamant that the amendment is unnecessary and the Government must oppose it.

Question - That the amendment be agreed to - put.

The Committee divided.

Ms Allan Mr Markham
Mr Amery Mr Martin
Mr Anderson Mr Mills
Mr A. S. Aquilina Ms Moore
Mr J. J. Aquilina Mr Moss
Mr Bowman Mr Neilly
Mr Crittenden Mr Newman
Mr Doyle Ms Nori
Mr Face Mr E. T. Page
Mr Gaudry Mr Price
Mr Gibson Dr Refshauge
Mrs Grusovin Mr Rogan
Mr Harrison Mr Rumble
Mr Hunter Mr Scully
Mr Iemma Mr Shedden
Mr Irwin Mr Sullivan
Mr Knight Mr Thompson
Mr Knowles Mr Whelan
Mr Langton Mr Yeadon
Mrs Lo Po'
Mr McBride Tellers,
Dr Macdonald Mr Beckroge
Mr McManus Mr Davoren

Mr Armstrong Mr D. L. Page
Mr Baird Mr Peacocke
Mr Beck Mr Petch
Mr Blackmore Mr Phillips
Mr Causley Mr Photios
Mr Chappell Mr Richardson
Mrs Chikarovski Mr Rixon
Mr Cochran Mr Rozzoli
Mrs Cohen Mr Schipp
Mr Collins Mr Schultz
Mr Debnam Mrs Skinner
Mr Downy Mr Small
Mr Fraser Mr Smith
Mr Glachan Mr Souris
Mr Griffiths Mr Tink
Mr Hartcher Mr Turner
Mr Humpherson Mr West
Dr Kernohan Mr Windsor
Mr Kinross Mr Zammit
Mr Merton
Mr Morris Tellers,
Mr W. T. J. Murray Mr Jeffery
Mr O'Doherty Mr Kerr

Mr Carr Mr Cruickshank
Mr Clough Mr Fahey
Mr J. H. Murray Mr Longley
Mr Nagle Ms Machin

The TEMPORARY CHAIRMAN (Mr Hazzard): Order! The numbers being equal, in accordance with established tradition I give my casting vote with the noes and declare the question to have passed in the negative.

Amendment negatived.

Page 1933

Mr ROGAN (East Hills) [10.52]: I move:

No. 2 Page 3 Schedule 1(3), proposed section 8B(3), lines 16-17. Omit "without the approval of the Minister", insert instead "without the authorisation of a resolution passed by both Houses of Parliament".

As I stated during the second reading debate, the purpose of this amendment is to give parliamentary approval when any of the assets or any of the interests in the subsidiary company established by this legislation are proposed for sale. As the bill reads now, the commission must not, without the approval of the Minister, sell or otherwise dispose of an interest in a subsidiary company. The Opposition proposes that authorisation of the Parliament be required for the sale of such interests.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [10.54]: Honourable members talked earlier about some of the difficulties with the first amendment. They flow through to this amendment. The honourable member for East Hills - perhaps a number of members - is concerned about a potential privatisation plan. As privatisation would involve a core asset, the Parliament would have to pass specific legislation to achieve privatisation. This amendment would not achieve that process and, as I am advised, would hinder the process we are talking about.

Mr HUNTER (Lake Macquarie) [10.56]: I support the amendment moved by the honourable member for East Hills. The Minister has said that he is not in favour of privatisation. If he has nothing to hide and is not in favour of privatisation, why does he oppose the amendment?

Question - That the amendment be agreed to - put.

The Committee divided.

Ms Allan Mr Markham
Mr Amery Mr Martin
Mr Anderson Mr Mills
Mr A. S. Aquilina Mr Moss
Mr J. J. Aquilina Mr Neilly
Mr Bowman Mr Newman
Mr Crittenden Ms Nori
Mr Doyle Mr E. T. Page
Mr Face Mr Price
Mr Gaudry Dr Refshauge
Mr Gibson Mr Rogan
Mrs Grusovin Mr Rumble
Mr Harrison Mr Scully
Mr Hunter Mr Shedden
Mr Iemma Mr Sullivan
Mr Irwin Mr Thompson
Mr Knight Mr Whelan
Mr Knowles Mr Yeadon
Mr Langton
Mrs Lo Po' Tellers,
Mr McBride Mr Beckroge
Mr McManus Mr Davoren

Mr Armstrong Mr O'Doherty
Mr Baird Mr D. L. Page
Mr Beck Mr Peacocke
Mr Blackmore Mr Petch
Mr Causley Mr Phillips
Mr Chappell Mr Photios
Mrs Chikarovski Mr Richardson
Mr Cochran Mr Rixon
Mrs Cohen Mr Rozzoli
Mr Collins Mr Schipp
Mr Debnam Mr Schultz
Mr Downy Mrs Skinner
Mr Fraser Mr Small
Mr Glachan Mr Smith
Mr Griffiths Mr Souris
Mr Hartcher Mr Tink
Mr Humpherson Mr Turner
Dr Kernohan Mr West
Mr Kinross Mr Windsor
Dr Macdonald Mr Zammit
Mr Merton
Ms Moore Tellers,
Mr Morris Mr Jeffery
Mr W. T. J. Murray Mr Kerr

Mr Carr Mr Cruickshank
Mr Clough Mr Fahey
Mr J. H. Murray Mr Longley
Mr Nagle Ms Machin

Question so resolved in the negative.

Amendment negatived.

Mr ROGAN (East Hills) [11.3]: In view of the last two amendments being passed in the negative, I will not be moving amendments Nos 3 and 4 standing in my name because they were consequential on the success of amendments Nos 1 and 2. Therefore I move:

Page 4, Schedule 1(3), proposed section 8C. After line 7, insert:

(5) While the memorandum or articles of association of a subsidiary company do not provide that one of the directors of the company is to be a member of the staff of the company and elected by staff of the company in accordance with regulations under this Act:

(a) any existing delegation to the company under this section is automatically revoked; and

(b) no delegation may be made to the company under this section.

For the purposes of this subsection, staff of a subsidiary company include staff employed by the company or staff of the Commission seconded to the company. Regulations may be made for the purposes of elections referred to in this subsection.

The purpose of the amendment, as I outlined earlier, is to provide for the regulations to be prepared for the election of a worker elected representative on the board of any of the subsidiary companies and, accordingly, I ask all honourable members to support the amendment.

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Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [11.4]: I said in my second reading speech that there is already an employee representative on the principal board of Pacific Power. There is also an employee representative on the board of Power Coal. I do not believe this amendment is necessary, but having regard to the spirit in which this legislation has been entered into, I am prepared to accede to the amendment that has been moved by the honourable member for East Hills.

Amendment agreed to.

Mr ROGAN (East Hills) [11.5]: I move:

Page 4, Schedule 1(3), proposed section 8E(2). After line 31, insert:

(b) the Freedom of Information Act 1988; and

This amendment is to allow for the provisions of the Freedom of Information Act to apply to these subsidiary companies. I am aware that the Minister indicated in his reply that this may well be the case, given that this is a subsidiary of the main body, the Electricity Commission - Pacific Power is its business name. The Opposition moves this amendment to ensure beyond any doubt that the Freedom of Information Act applies to any of the subsidiary companies.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [11.6]: The honourable member for East Hills is correct that because the freedom of information legislation applies to the parent company, it similarly applies to the subsidiaries. For example, freedom of information already applies to Power Coal, which is a subsidiary established under Pacific Power. One might wonder why it never required enabling legislation to create Power Coal as a subsidiary company. That is because the source of coal is not core business to the Electricity Commission and, therefore, under the Act did not require enabling legislation. However, because transmission is a core business, this enabling legislation has been brought forward. Sadly the Parliamentary Counsel would say that this amendment is unnecessary, but again, for the sake of clarity, I am prepared to accept it.

Amendment agreed to.

Mr ROGAN (East Hills) [11.7]: I move:

Pages 5-6, Schedule 1(3), proposed section 8F. Omit all words from line 29 on page 5 to line 13 on page 6 (both lines inclusive), insert instead:

(2) The staff remain staff of the Commission, and are merely seconded to the subsidiary company.

As outlined earlier and with due regard to the Minister's reply to the second reading contributions by the Opposition, this amendment is proposed to protect beyond any doubt the rights, privileges and conditions pertaining to employees of the Electricity Commission who are transferred to these subsidiary companies. This will put beyond any doubt the fact that these employees are simply employees of the commission on secondment to the subsidiary body, and will ensure that the rights, privileges and benefits that are accorded to employees of the main body apply equally to the subsidiary company.

The TEMPORARY CHAIRMAN (Mr Hazzard): Order! The Chair is having great difficulty hearing proceedings. I am sure Hansard is experiencing similar difficulty. Members should be courteous by keeping the level of their conversations at an absolute minimum. If they wish to continue their conversations, they should leave the Chamber.

Mr WEST (Orange - Minister for Energy, and Minister for Local Government and Co-operatives) [11.11]: I understand the reason the honourable member for East Hills moved the amendment: to protect employment conditions, superannuation, the right of appeal to the Government and Related Employees Appeal Tribunal, and redundancy provisions. Proposed section 8F(2) provides that each member of the staff concerned, after the order takes effect, becomes a member of the staff of the subsidiary company. That clause also provides that awards, agreements and determinations applying, immediately before the order takes effect, to such members of the staff of the commission, shall continue to apply to each member of the staff concerned until other provision is duly made. Provision would be duly made when concern arises, for instance, that a new award might be made. Concern may emerge after that point. However, it is unlikely in the interim period that a new award will be made. On the other hand, board directors could believe that if people are employees of subsidiary companies they might not be as committed to getting on with the task.

I accept the amendment proposed by the honourable member for East Hills. However, in doing so I ask that he and employees of the Electricity Commission involved in this secondment endeavour to understand the spirit in which I and, I am sure, the honourable member for East Hills have entered into this matter. I hope that spirit, flowing through the organisation, will convey the message that we will be back in this Chamber debating a more principled piece of legislation, probably during the next budget session. In this instance I am prepared to accept these amendments in the hope that the spirit of what we are attempting to achieve will flow to employees and impart to them confidence that the Government is not trying to hijack any of their agendas and that their award conditions are as important to me as they are to them.

Amendment agreed to.

Schedule as amended agreed to.

Bill reported from Committee with amendments, and report adopted.

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