Auditor-General (Supplementary Powers) Bill 2008

Debate resumed from an earlier hour.

Mr GEOFF PROVEST (Tweed) [11.47 a.m.]: I join in debate on the Auditor-General (Supplementary Powers) Bill 2008 and acknowledge at the outset that the sale of the State's power assets is an extremely contentious issue. The decision made by the Iemma Government has been met with fierce criticism from the media and the general public, and even within Labor Government ranks. The sale of the State's energy supply does not sit well with the people of the Tweed. Once again, I am 100 per cent for the people of the Tweed!

Ms Angela D'Amore: Don't you get sick of saying that?

Mr GEOFF PROVEST: I do not get sick of saying that because I was elected to represent the people of the Tweed. Two young students from Lindisfarne Anglican Grammar School are present in the gallery, and I welcome them to the Parliament. Some years ago I witnessed privatisation of the Queensland power industry. At that time I knew a number of people who worked for Energex. Immediately after the sale, despite guarantees relating to their employment and their future, a large number of them suddenly found they had been made redundant. Moreover, the price of electricity has continually increased, despite assurances given at the time of privatisation. Once again, that was a Labor Government. Perhaps we need to look at the real reason for the sale. It has been stated clearly in this Chamber many times by the Premier and others that the State will run out of power in the near future. That is a fact.

Mr Andrew Fraser: Because of their incompetence.

Mr GEOFF PROVEST: Yes, because of the Government's incompetence. If you have a State-owned product you need to invest in it on an ongoing basis and maintain it. We have a number of young people in the gallery today and I am sure they do not want to read in 2015 or thereabouts that we should have reinvested in the industry on an ongoing basis and not let it run down. The Opposition has proposed a number of amendments that will be moved later today. What do those five amendments say? Let us be open and transparent. They are not the Labor Government's generators; they are not the Opposition's generators; they belong to the people of New South Wales. They own then and they should be protected. I will support the amendments because we have seen in recent times this Labor Government—

Mr Andrew Fraser: Lie to us.

Mr GEOFF PROVEST: Lie to us. I refer to the Cross City Tunnel, which was a great business deal. We had to put $25 million into the Lane Cove tunnel to appease the owner.

Mr Andrew Fraser: You could sleep in there and you wouldn't get run over.

Mr GEOFF PROVEST: I ask the shadow Minister for Road Safety: Is there much of a problem with the Cross City Tunnel?

Mr Andrew Fraser: Only the fact that no-one is using it.

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Tweed will direct his comments through the Chair.

Mr GEOFF PROVEST: A good call indeed. I spoke in the House about my strong opposition to nuclear energy. I notice one of the amendments refers to the national emissions trading scheme. As we all know, the environment is our chief concern. Carbon credit trading will come into being very shortly, but what will be the net cost? What are we not being told? In regard to professional advice, as I previously stated, things such as the Tcard have not been what you would call flash. In fact, you would call them pretty dismal. Also, over Labor's years in government a fairly significant debt has been incurred in regard to the current generators and electricity suppliers. Where is the real debt, and will that have an impact on the terms of the sale? Foreign ownership is an issue dear to my heart. Australians built these products. Without electricity the nation will not prosper or go forward. I for one would be very concerned if there was a large amount of foreign ownership of our generators.

Mr Andrew Fraser: What cost?

Mr GEOFF PROVEST: The cost now but also the cost for future generations when the young people in the gallery have their families. That is when the real cost will occur. With all those factors to be considered, what is the real net price of the sale? Rural impact statements are crucial. But probably, at the end of the day, the Government has the numbers to force the legislation through, even though seven Government members may or may not represent their areas properly and cross the floor. With regard to the application of funds, I am 100 per cent for the Tweed, where there is a chronic shortage of hospital beds, police, schools, et cetera. If all that money is focused here in Sydney none will be available for regional areas.

Ms Angela D'Amore: Oh, come on! What did you get in the budget?

Mr GEOFF PROVEST: Yes, let us have a look at the recent budget.

Ms Angela D'Amore: What did you get? Tell us.

Mr GEOFF PROVEST: Very little—nothing. I encourage the member for Drummoyne to have a look at the budget briefing papers and see what we got. Once again, I am 100 per cent for the Tweed. I fully endorse the amendments.

Mr ALAN ASHTON (East Hills) [11.54 a.m.]: The Auditor-General (Supplementary Powers) Bill 2008 is a procedural bill in that it allows the Auditor-General to examine the proposal to lease the generators and sell the retail arms of the electricity industry, and to examine just how that will happen before the process happens rather than, as has been a tradition, examining these processes way after the events have taken place. As I have spoken at and voted in all the appropriate Government party meetings against the privatisation proposal, I place on record today my opposition to privatisation of the electricity industry. When the bill comes before the House again I will make a more detailed contribution.

Ms CLOVER MOORE (Sydney) [11.55 a.m.]: First I say how disappointed I am and how concerned I am about the serious deterioration in the management of this Parliament. To suspend standing orders and put this important bill through all stages today at a time when most members have not even seen the bill is a real indictment. It is becoming a too-frequent action by the Leader of the House to treat the management of the Parliament, the members and, therefore, their communities with contempt by not managing the program in such a way that members are able to consult and examine the legislation before they speak on it or vote on it.

Legislation that is non-controversial should lie on the table for five days; legislation that is controversial or landmark legislation such as this should be on the table for 28 days. This would allow the New South Wales community to be aware of what is happening in this democratic body, and it would allow members to examine the bills, consult with various stakeholders and communities and then make an informed decision when the legislation came before us. I condemn the process we have seen today. I am very sorry to see the deterioration in the running of this Parliament. As I said previously, it is the worst I have seen, and I call upon the Leader of the House to start doing some work in managing the very important business of the Parliament and ensuring that all members are in a position to inform themselves before they have to speak or vote upon such important matters as that which we have before us today.

I support the Auditor-General (Supplementary Powers) Bill 2008, which will require the Auditor-General to review and report to Parliament on the Government's proposal to restructure the electricity industry. The restructuring of the electricity industry is a once-in-a-generation opportunity to address global warming through one of the largest sources of emissions: the electricity industry. Australia's ability to achieve post-Kyoto emission reduction targets will depend on a speedy and successful shift to new green energy generation. The terms of any sale and the disposal of any sale proceeds need to be framed around this issue, and ensure that new investment in power infrastructure does not merely entrench our dependence on coal-fired power.

There certainly needs to be a restructuring of the industry and a massive investment in power infrastructure to address global warming, and it is clear that the New South Wales Government views privatising the industry as a way of raising the money for future infrastructure investment without diverting public funds from other important community services. I have real concerns about privatisation, but if the Government is determined and it has the numbers to go down this path then at the very least the proposal must ensure that any future sale is subject to very clear-cut conditions. The negotiation of any future sale agreement must reflect the following conditions: no new coal-fired power stations to be built by the purchaser; a specified mandatory time limit for a transition from existing coal-fired energy production to renewable sources of energy or gas-fired power; no exemption, no compensation and no sheltering of the electricity industry from the introduction of an emissions trading scheme; no proceeds of the sale to be invested in clean coal research—this should be funded solely by the coal industry and the Government should not be subsidising this industry; any Government investment in alternative energy technology research should be directed at renewable and transitional energy sources; an investigation of capacity for decentralised power generation to reduce demand for coal-fired electricity, such as green transformers generating local sources of power through "co" and "tri" generation in city buildings.

I understand that the focus of the proposed Auditor-General's review is the maximisation of the financial value of the privatisation scheme. However, sustainability and the capacity to shift to a new green economy are the most important, indeed, the most compelling, aspects of the debate—that is if any of us in this place care about the future, the planet and our legacy for our children. It is a grave concern to me that these important matters have not been adequately acknowledged or addressed in this debate. They have certainly not driven the decision-making process. I call upon the Auditor-General to address this serious omission in his review.

Mr MATTHEW MORRIS (Charlestown) [12.01 p.m.]: It is with pleasure that I support the Auditor-General (Supplementary Powers) Bill 2008. However, I will make a few comments about the bill and the role of the Auditor-General. Much has been said this morning on both sides of the House and individual members have stated their position on the power privatisation issue. I state on the public record that I will oppose the privatisation of the power industry. I will do so on the basis of one very simple principle: the absolute failure to demonstrate any public benefit as a result of this process. We have experienced the privatisation of many government entities in this State, federally and at the local government level. We should not forget that local government also privatises services. The privatisation of Qantas, Telstra and the Commonwealth Bank come to mind. None of them or the many other privatisations that have occurred in this country have been able to demonstrate a public benefit. If there is no public benefit then we must ask ourselves why they have gone ahead.

I support the Auditor-General's role in reviewing the proposal on the table. He will need to look at many issues, including the proposed method of affecting transactions, the proposed timing of transactions, including the impact of external factors, any contingent liabilities that will accrue to the State—that is, the people of the State, us—and any other factors that may impact on the potential sale price of the assets. That is a wide range of issues, but they are all very important. At the end of this process, the Auditor-General, being the professional he is, and his officers will highlight some deficiencies in the proposal, and that will be a good thing. The public certainly has a right to know and to understand exactly what is involved in this process and the potential risks to the public purse. I know that as time goes on much more will be said about this issue, and I will say more.

Mr Andrew Fraser: You could be Premier.

Mr MATTHEW MORRIS: I love these interjections: keep them up. Nevertheless, as the debate goes on much more will be said by members in this place. That is what this place is about. I hope at the end of day that commonsense will prevail. If this is not in the public interest, why the hell are we doing it? It is as simple as that. Stay tuned.

Mr PETER DRAPER (Tamworth) [12.05 p.m.]: I support the Auditor-General's role in oversighting the proposed sale of the electricity industry and his examination of the potential impacts, especially in country communities. The manner in which this issue has been brought before the Parliament is absolutely appalling. I was speaking to visiting captains of schools an hour ago when the bells rang. I do not know whether it is arrogance or incompetence, but this is another example of the Government's ramming through legislation, allowing no opportunity for members to look at what is being proposed. I have not seen this legislation. How can we support something—or even oppose it—sensibly if we do not know what the damn thing is? That is the height of arrogance. The Government is treating this place with disrespect—not only the members but also the institution itself. There is an appalling lack of information.

To suspend standing orders to ram through legislation in one day when the public is outraged is unacceptable. The Labor Party clearly opposes the privatisation of the electricity industry. The Opposition, by putting up its five-point plan, at least appears interested in the process. I have never been inundated with so many emails and letters in my life. I have been receiving about 400 to 500 emails a day, every one opposed to the sale of the electricity industry. My position has been clear since day one; that is, I have not seen anything to suggest that this process will result in any significant public benefit. Like most people, I am sick and tired of governments continually selling the farm. There will soon be nothing left to sell. While I support the fact that this legislation will allow the Auditor-General to examine and scrutinise the process, the way it has been introduced is appalling.

Mr STEVE WHAN (Monaro—Parliamentary Secretary) [12.07 p.m.]: I support the Auditor-General (Supplementary Powers) Bill 2008. Members opposite, having called for the bill to be introduced, are complaining about it being introduced now. This is yet another example of opposition for opposition's sake. It does not matter which side members take in the power privatisation debate, this bill should be acceptable to everyone. Some of the comments being made are bizarre. Members said that they wanted something, but when it arrived they rejected it. I had the privilege of being a member of the Unsworth committee, which examined the Government's proposals.

ACTING-SPEAKER (Ms Diane Beamer): Order! Members will cease interjecting.

Mr STEVE WHAN: I will run through the committee process, which was very interesting. Many inaccurate comments have been made by members opposite about what was said and done about the impact of this proposal on rural communities.

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Coffs Harbour will cease interjecting.

Mr STEVE WHAN: The 12 points in the Labor Party's policy that the Government started dealing with included an assessment of the impact on regional communities. The Government's response to the Australian Labor Party policy as presented to the Unsworth committee did deal with the impact on regional communities. It referred to the location of jobs and how they would be protected. It also addressed a range of other issues. As a member of the committee I raised a number of issues that were dealt with in the report. They included a recommendation that Country Energy stay as a separate entity and guaranteeing that it would not be rolled into the other distribution businesses.

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Murray-Darling will cease interjecting.

Mr STEVE WHAN: I will be delighted to deal with the member for Murray-Darling in a moment. The Unsworth committee considered a number of issues that are important to regional communities. It also considered where the proceeds of the sale should be directed, and I made a number of strong points about that. However, I want to be very clear about potential impacts. Country Energy employs a large workforce in regional New South Wales to deal with poles, wires and so on. They will not be affected by anything this Government is proposing; their jobs are secure. Unlike Coalition governments, this Government is not proposing to sell the monopoly infrastructure. In fact, 80 per cent of the energy sector is involved in distribution infrastructure and that will stay 100 per cent in government ownership. Members opposite who cannot understand that are dopey: it is a basic point. The distribution infrastructure will be 100 per cent government owned. The Kennett Government in Victoria sold off the poles and wires and the Federal Liberal Government sold off the natural monopoly enjoyed by Telstra. It is obvious that the problems they are experiencing relate to that aspect of the sale process.

The New South Wales Government very sensibly is proposing to keep the natural monopoly infrastructure in place. I ask members opposite to consider retail for a moment. Since the introduction of competition into the retail electricity market in 2002 State-owned corporations have steadily lost market share. This means that State-owned assets, which belong to the people of New South Wales, have lost and continue to lose value. The right thing to do for New South Wales is to realise the value of these assets now and reinvest the proceeds in alternative assets.

Mr John Williams: Rubbish.

Mr STEVE WHAN: The Nationals say it is rubbish. I am quoting the Leader of The Nationals in his reply to the budget last year. That is a direct quote from their leader, and they say it is rubbish. It amazes me to hear that.

Mr Andrew Fraser: Point of order: The overview of the bill states that it amends the Public Finance and Audit Act to provide for the Auditor-General to review and report to Parliament on the Government's overall program for restructuring the State's electricity industry. The member for Monaro is now debating the sale of the electricity industry, not the Auditor-General's role. I ask that he be brought back to the leave of the bill.

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Monaro was canvassing issues that relate to this bill. He may continue.

Mr STEVE WHAN: The Nationals are a bit sensitive, having said that their leader's speech on the budget last year was rubbish. Generally his comments are rubbish, but I just wanted to quote that interesting comment. Since then The Nationals have been doing backflips. As I explained to retail employees whom I met with in Queanbeyan, we want to avoid the erosion of their jobs over time with no guarantees. The Nationals are anxious to have their position heard by way of interjections. The member for Murray-Darling, who has been very vocal in this place, was recently asked on the 2BH morning show about Barry O'Farrell giving in-principle support for the sale of the retail sector. The media summary of the interview stated:

Williams says he has the fortune to remain an independent from the Coalition—

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Murray-Darling will cease interjecting.

Mr STEVE WHAN: As I said, the media summary stated:

Williams says he has the fortune to remain an independent from the Coalition and is against the sell off.

A previous speaker may have already quoted the interview with the member for Barwon.

Mr Michael Daley: No, let's have it.

Mr STEVE WHAN: The member for Barwon said that he did not support any privatisation at all. The interviewer asked:

Okay, so does that put you at odds with The Nationals then if the rest of The Nationals are saying "We will support it on certain conditions?"

The member for Barwon answered:

No certainly not. The Nationals are not supporting the sale—

Yet, the year before the Leader of The Nationals said—

Mr John Williams: Point of order: The member for Monaro keeps quoting this inane stuff. However, I thank him for the praiseworthy comments he makes about me.

ACTING-SPEAKER (Ms Diane Beamer): Order! What is the member's point of order?

Mr John Williams: The point of order is that this bloke is a puppet for the—

ACTING-SPEAKER (Ms Diane Beamer): Order! The member for Murray-Darling knows very well that there is no point of order. The member for Murray-Darling will cease interjecting and raising frivolous points of order.

Mr STEVE WHAN: I agree with the member for Murray-Darling on one point: I have been quoting inane comments from inane people. Their own words are coming back at them. I understand their objections because they say one thing in Sydney and a different thing in their electorates, and they think they can get away with it. Electricity generation is now a competitive sector. The national electricity market, which was introduced in the early 1990s by Paul Keating, has resulted in healthy competition throughout Australia. For example, in seven of the past 10 years Victoria's electricity prices have been lower than the cost of electricity in New South Wales. I get frustrated when people make bland comments that prices will go up, without being able to support those comments. That information is shown in great detail on the website of the national electricity market.

There is healthy competition in that sector and already private sector involvement in generation. The private sector has invested heavily in the sector. During question time yesterday when one of the Ministers, or perhaps the Premier, was talking about the new gas-fired plant being built in Wollongong, an Opposition member interjected, "So, why are you selling it?" We never owned it; it is a private sector investment. That comment is demonstrative of the knowledge of the Opposition.

ACTING-SPEAKER (Ms Diane Beamer): Order! Members will cease interjecting.

Mr STEVE WHAN: At the moment the industry is a mixed business with public and private sector investment. Other members may disagree with me and have their own views on this, but I believe government investment in industry should be on the basis that it demonstrably produces a social benefit for the people of New South Wales. The money that needs to be invested in this area could be better used on infrastructure in regional New South Wales. Local governments need more funds to invest in economic and social infrastructure in their towns. Over the past decade under the Howard Government, the real value of the financial assistance grants to councils in New South Wales has slid dramatically. Councils are hard-pressed for funds and now require an extra $400 million to $500 million to bring them back to where they were in 1995-96. If they do get more money for infrastructure, they will not be able to provide for the needs in their area. Opposition members think that the Government's budget is a magic pudding from which it can keep taking money without putting any money back in.

ACTING-SPEAKER (Ms Diane Beamer): Order! I call the member for Coffs Harbour to order.

Mr STEVE WHAN: It is okay for the Opposition to think that, but the Government knows that only so much money can be taken out and only a certain level of debt can be reached before people suffer. We want to make greater investment in capital infrastructure and services. I turn briefly to issues that some members are confused about—global warming and greenhouse gas emissions. We need to take action in Australia to combat global warming, and that means introducing carbon trading. As a result of carbon trading, electricity prices will rise—no matter who operates the generators. Carbon trading will put up the price of coal-fired power. Both the New South Wales and Federal Governments must focus on ways to help the people who are least able to afford rising prices. That is why we are working on energy conservation, assistance for pensioners and other measures. If the price of coal-fired power does not rise, people will not move to renewable energy, which is part of the carbon trading equation. It is also a key reason why the Government should not have a conflict of interest by the Treasury, which is dependent on revenue from coal-fired generation, putting forward a position on carbon trading and whether or not permits should be free. Treasury probably does not agree with me on that, but that inherent conflict of interest has to be dealt with. The Nationals do not believe that climate change exists. As I said yesterday in this place, their heads are still buried in the sand. Carbon trading is necessary to address climate change. It will have an impact on the price of electricity. But the operation of carbon trading will be separate from the ownership, management and operation of generators. Some members have difficulty understanding that fundamental difference.

I had the pleasure of serving on the Unsworth committee, with Jeff Angel from the Total Environment Centre and Reverend Harry Herbert who put forward views for their sectors. It is interesting that the Total Environment Centre endorsed recommendations of the Unsworth committee on behalf of the environment movement while Reverend Harry Herbert announced measures on behalf of those less fortunate in the community. Those recommendations have been included in the Unsworth report. I do not understand why the Opposition is so vehemently opposed to increasing the pensioner rebate and other important measures. No member could really oppose this bill, which puts in a place a provision that allows the Auditor-General to review the matter. It is a sensible provision that has been used in the past. I commend the bill to the House.

Mrs DAWN FARDELL (Dubbo) [12.20 p.m.]: I make a brief comment on the Auditor-General (Supplementary Powers) Bill 2008. I join other members in stating that it is appalling that the Government has dumped the bill on the Opposition and crossbench members with no notice. We have developed a thick skin in this place, but this is an insult to the people that we represent. I am against the electricity privatisation for many reasons, one being the fact that the legislation is being rushed through the Parliament. They pushed the issue through their State conference and they are now rushing it through the Parliament. Many hours have been wasted in the Parliament by members speaking for an unlimited time on hairy-nosed wombats and matters of much less importance than this issue, which is vital to all areas of the State. Electricity and water are our prime resources, and we want to own them. The people of my electorate are against the sale of these resources in the same way that they were against the sale of the Snowy Mountains scheme. The Government, in seeking to push through the legislation, is treating the people of my electorate and the rest of New South Wales with total disregard. The House has been sitting family-friendly hours. I would rather the House sat until midnight or 1.00 a.m. each day to allow all members adequate time to research and consult to ensure that the legislation is correct. What the Government has done is appalling. It is necessary that the Auditor-General be involved. Indeed, in proposed schedule 1A the bill provides that the Auditor-General will review:

(v) the sale price of the assets that is reasonably expected having regard to the professional advice and the Government's preliminary estimates.

I have done research on and read media releases about the benefits of the electricity sell-off. The figures are way out. I hope the Auditor-General can reach a realistic figure. I have heard figures ranging from $10 million to $15 million to $25 million and beyond. I have been told that funding for the North West Metro will come out of forward budgets, not from the sale of the electricity generation. That project has been estimated at $12 billion. As members know, project costs blow out, so the North West Metro could end up like the Glasshouse project at Port Macquarie. If the sale goes ahead for $15 billion, little money will be left over for rural and regional New South Wales, which needs significant investment in infrastructure. Many Sydneysiders who are suffering mortgage stress could buy a luxurious home in a country area, thereby reducing the burden on city infrastructure. Members representing rural electorates would agree that the sale is all about providing motorways and freeways in Sydney, not infrastructure for rural and regional areas. For that reason, we need more time to consider this issue. Although I will agree to the passing of the bill, I ask the Government to particularly note the amendment I referred to, as it is essential for accountability. I reiterate, it is appalling that the people of New South Wales are not being heard and lack of planning has meant that members have not had sufficient time to properly consider this bill.

Mr RICHARD AMERY (Mount Druitt) [12.24 p.m.]: I support the Auditor-General (Supplementary Powers) Bill 2008 as a process of finalising the electricity matter later in the year. In principle, I take on board the concerns of the Opposition and Independents as to how quickly debate was brought on, but members should have regard to the history of the bill. The bill evolved through debate led by the Opposition over the past couple of weeks. The Opposition made this bill a condition of its support for the restructuring of the electricity industry. Legislation is rushed through the Parliament because of governance and timetables. As this bill comprises only two pages, it should not take too long to read its contents and, after all, it is an Opposition-sponsored proposal. The bill was a condition of its support for any electricity restructuring, so it is a bit tongue in cheek for the Opposition to say it is being rushed through the Parliament. The Opposition called for this legislation. As a result, I was somewhat surprised that the Opposition voted against bringing the debate on today. Sometimes I cannot understand its strategy.

The bill poses some difficulty for the Auditor-General. It is the role of the Auditor-General to review legislation and the accounts, budgets and operation of government entities after matters have been finalised. This bill provides that the Auditor-General review a proposal that is yet to have ink put to paper. The Leader of The Nationals stated that a similar proposition was put back in 1994 in relation to the sale of the State Bank. I recall the debate but not the role of the Auditor-General. History shows that we received just over $500 million from the sale of the State Bank, lock, stock and barrel, goodwill and real estate. That was not a good deal for New South Wales. If we are pinning our hopes on the role of the Auditor-General as a guarantee for success, the example of the State Bank sale is not a good one. Indeed, in that case the whole entity just moved from the ownership of government to another entity.

This is an unusual debate in that members have referred to the electricity industry being privatised and have compared it to Qantas and the Commonwealth and State banks. The electricity industry is nothing like those entities. I prefer the term in this bill, which refers to a restructuring of the electricity industry rather than a privatisation of the electricity industry. The Government is not selling the generators but leasing out property. The management of those generators will be in the private sector. The Government is not selling the major part of the electricity industry. The forward estimates show that real growth as far as revenue to the State is concerned is in the distribution sector. If we kept everything in government ownership, the real growth in revenue and dividends would come from the distribution sector of the electricity industry, not the generation sector, which is under severe competition from other States and participants. The marketing area is being privatised. It is now outmoded for the Government to be involved in a national competition fight with other electricity sellers. The Government should not be involved in competing with Western Australia, Queensland or Victorian sellers of electricity. It is a risky game. I hope that the Auditor-General takes into account that this is a restructuring of the electricity industry, not the sale of the electricity industry, as most speakers have stated.

I recognise, as I have pointed out in many letters to people and as many speakers have highlighted today, that it is obviously difficult for a Labor Government and Labor members of Parliament to use the term "privatisation restructuring". The Opposition will not lose the opportunity to bloody the Government's nose on what is a difficult fundamental issue for the Labor Party to handle. We support not only this bill but also the bill to restructure the electricity industry. I have been a member of this place for a mere 25 years. When I was the Minister for Agriculture I was responsible for the deregulation of the dairy industry. It was not something I liked doing, but it was my job, it was the Government's job, and it was industry's job at that time, to be quite honest.

I point out that members of the Government and members of the Opposition sometimes have to stick with legislation regardless of whether they like it. I do not have a fundamental disagreement with this package, nor do I feel uncomfortable with it or with the subsequent restructuring of the electricity industry, which was flagged by the Premier in his agreement in principle speech. However, I recognise just how difficult it is for Labor members to debate this bill. My message is that the bill does not require a conscience vote; it is not a conscience issue. Since 1891 Labor governments have been strong on sticking with caucus decisions and voting in this Chamber as a block. That is the strength of the party and that is why Labor governments hold parliamentary office for so long.

We have our squabbles in conferences, in party rooms and in caucus, but when we come into the Chamber we vote as a block. The Labor Party has always enforced that principle, and in New South Wales the New South Wales branch administrative committee has enforced it. However, in the past 12 months in this debate it has gone off the rails somewhat. As a supporter of States' rights and as a Labor member of a State Parliament, I am concerned that if union leaders continue attacking the Premier, if members of the party continue attacking the Premier and if party presidents—for example, Mr Riordan, who had the dual role with the union—are outwardly attacking the Government, we will invite national executive intervention into the workings of New South Wales against our wishes. The national executive has had to intervene in years gone by. For example, it intervened in Victoria over its preselection process and into New South Wales in the late 1960s.

It was national executive intervention in the 1930s that took away the annual conference policy right to elect the parliamentary leader, and that brought to an end the era of Jack Lang as Leader of the Labor Party in New South Wales. As a State party we have a responsibility to make sure that we get back on the rails. We cannot afford to indulge ourselves in this proposal. If we do, we will lose the right to make important decisions such as this. I do not believe that the national executive and the Federal Government will stand by and allow this policy to fall completely off the rails. The Prime Minister has already said he supports it. This is a competition policy on the national grid, and is consistent with the national policy of the Labor Government and the Labor Party.

This is a difficult issue for us all. In this place we have all had to eat the proverbial humble pie from time to time, but our strength comes from sticking with the caucus decision—caucus solidarity in Parliament—and we will have to do so on this occasion because if we do not we will invite the involvement of the national executive against our wishes. That will certainly sort out a lot of other problems that the party now faces. I support the bill. I know it has been of great concern to the Opposition. It is now before the House and I ask members to recognise that this matter has been brought to the House hurriedly because of a campaign and a condition placed on the Government by the State Opposition.

In effect, it has been a win for the Opposition. But it should not have it both ways; do not give us a serve for bringing it forward so quickly. A lot of pressure is on the ultimate restructuring of the electricity industry, and that has to be addressed. This is a difficult time for all Labor members of Parliament, and a difficult time for the Labor Government. The Premier and the Government have my support for the proposal and the subsequent legislation that will be introduced into the House in the months ahead.

Mr GREG PIPER (Lake Macquarie) [12.34 p.m.]: I oppose the Auditor-General (Supplementary Powers) Bill 2008. I acknowledge the opportunity to speak on the bill due to the diligence of the Opposition in proposing amendments to it. I am under no illusion that the Opposition would not be necessarily philosophically aligned with a proposition to privatise the State's power industry. I imagine that Opposition members, like most right-minded people in New South Wales, would be absolutely appalled with the process that has brought this issue before the House. A fair and reasonable debate could have been held on this proposed privatisation, and it is about privatisation, no matter how it is dressed up, whether as a lease or a partial sale. Long-term leases for 50 to 99 years are tantamount to privatisation.

The process in this matter has been appalling. Privatising the electricity industry was not part of State Labor's policy at the 2007 election, and the people of New South Wales had no inkling that this would be on the agenda. They would have expected the New South Wales Labor Party to be much more protective of State assets. That certainly has not been the case. Members of Government have many demands placed on them to provide infrastructure and services, and they would look to doing that. This one-off sale, this one-off process, leads to the very real risk of any dividends from the privatisation process to be squandered, dissipated in short measure, and will leave a longer-term burden on the people of the State. I am absolutely opposed to that

I recall that soon after the Government was re-elected, having taken a slight kick in some electorates with a reduction in the expected vote for the Labor Party, the Premier gave an acknowledgement speech. He said he was very pleased and proud to form government once again and acknowledged that there had been a response by the public against the Government. He said that he would take that on board. That undertaking did not last very long, and very soon we saw what I believe amounted to arrogance. New South Wales has a history of problems with privatisation. We could all find examples that either support or oppose privatisation. I am very concerned about the proposal to privatise this significant and essential asset, and that we intend to rely on a process of regulation.

Regulation will be extremely difficult situation. Are we going to see major problems in the short term? No, I do not believe that is the case. Will we see a benefit? Of course we will. There will be money, there will be cash to spend and that will go into capital infrastructure and services. My concern is about the long term. This industry has been able to provide a substantial dividend to the State over a long time. The Owen inquiry found the industry to be in a parlous state that needs significant capital injection to bring it up to the requirements for power generation. That is more of a commentary on the history of the Government that has, over successive years, allowed the industry to fall into that state.

I question some of the outcomes of the limited and narrow Unsworth inquiry, which was not allowed to comment on whether power privatisation should be supported at all, but, rather, on how to implement it, and provide price protection and job protection for five years. I suggest that in the life of an economy such as New South Wales, five years will go in the blink of an eye. We will then start to see the impact of privatisation: the major consideration of private owners and operators will be shareholder profit. I certainly understand that and I am not opposed to shareholder profit.

Electricity is a basic utility. If we can agree philosophically to the privatisation of the power industry there is no reason why the State Government, or a successive State Government, would not be induced to consider the privatisation of other utilities that the public feel are dear to them and essential to protect their future welfare. I am not a huge supporter of the national energy market. I believe that it is a rather artificial construct and once all the States are fully privatised we might find some outcomes have us ruing the day we privatised the industry.

The proposition that has been included in the Auditor-General (Supplementary Powers) Bill is supported, but we must note that the Government did not wish to take this matter to the Auditor-General prior to the sale. That was an absolutely unconscionable position and I am very pleased to see it has been turned around. The Auditor-General should be able to review and comment on other methods of effecting the transaction, such as transaction sequencing and structuring. Such review will give us an assurance that maximum benefit will be derived from the sale, if the Government ultimately wins the support of the Opposition. I support the expanded powers of the Auditor-General to review the bill. However, I place on record my opposition to the privatisation of the State's power industry.

Mr BARRY COLLIER (Miranda—Parliamentary Secretary) [12.41 p.m.]: I support the bill to amend the Public Finance and Audit Act to provide for the Auditor-General to review and report to Parliament on the Government's program for the restructuring of the State's electricity industry. It is pleasing to see that the Opposition supports the bill. I have no doubt that the Opposition would not dispute, but in fact support, the need to reform the State's electricity industry. I believe many people have loosely used the term "privatisation" during this debate. I say upfront that I support the Premier's proposed reform bills.

Firstly, I support the bill for the reform of the electricity industry. Secondly, I support the Intergenerational Fund obliquely alluded to by the member for Lake Macquarie. That is where the proceeds of the leasing as well as the proceeds of the sale of the retail will be invested with a minimum balance for years. Funds invested will provide infrastructure in the form of hospitals, roads and schools for generations to come and will be indexed for some time into the future. I can see that virtually all members of this House will benefit from that. I would not expect any member to put up his or her hand and say, "No, I do not want any extra infrastructure. I do not want any new hospitals, roads or schools built in my electorate from the Intergenerational Fund."

It is important to realise that there are three parts to the electricity industry: the generators, the distribution network and the retail network. I will start with the retail network. Every time somebody from AGL comes to your front door and asks you to swap from EnergyAustralia to AGL, because it will offer you a better deal, and you swap, it takes away business from the State-owned retailers.

Mr Michael Daley: 400,000 people have gone already.

Mr BARRY COLLIER: As the member said, 400,000 people have left the State-owned retailers already. We are running those retailers at a loss. We are competing with 20 other retailers who have offices nationwide, and we are losing money. I understand it will cost the Government about $3 billion to make those retailers competitive. We are not selling infrastructure assets: we are selling a list of customers.

The second question I ask is this: What is our natural monopoly? We have a natural monopoly in electricity. It is not in the retailers because we are competing interstate. It is not in the generators because we have a national electricity market and we receive electricity from other States. It is in the powerlines, the wires, and the poles. Make no mistake about it: we are not selling that natural monopoly—that was on the front of the bill introduced by the Premier several weeks ago. We are not privatising our natural monopoly. It would be more of a cause of concern for many people if we were, but we are not, and the Premier has made that quite clear. We are leasing the generators. We are encouraging private investors in the generators because the cost of a new baseload generator, which the Owen Report said we need by 2012-13 to keep the lights on, is $8 billion.

Many of us in this Chamber would like to see the private sector compete in the national market with the other interstate investors and use the money in the Intergenerational Fund to provide hospitals, roads, schools and infrastructure for the people of our electorates. We are doing our job by serving the people in our electorates. Nobody in this Chamber would dispute the need for energy reform. I have not met anybody yet who would dispute that, but I understand that for some people this is a very difficult issue. So much so that the Premier established a 12-member consultative reference group headed by former Premier Barrie Unsworth, who also has quite a distinguished union background, to look at the impact on the Government's proposal on families, workers and the environment. In his report the Hon. Barrie Unsworth concluded:

The strategy should proceed in the best interest of the people of New South Wales.

That is what I had to consider for my constituents when I made my decision to support the Premier in the bills, which will be before the House in a few months. I do so for two reasons. Firstly, I believe it is in the best interests of the people of New South Wales. Secondly, when I joined the Labor Party and the Labor caucus I pledged that I would follow caucus decisions. This is a caucus decision, which I will follow.

Even putting my hat on as a former economic textbook writer, when I look at this I see that we have a natural monopoly that we are not going to sell off, a natural monopoly that will bring dividends to the State for years to come, and a natural monopoly that employs some 78 per cent of workers in the power industry. That is what we are keeping. That is worth keeping. Ross Gittins, the noted economics editor of the Sydney Morning Herald, made a point about this on 17 March 2008 when he said:

Since the advent of the national electricity market there's no longer any good reason for a government to stay in generation and retailing.

"No good reason." But he concedes that there is absolutely every reason for the Government to stay in the business of the powerlines, the poles and the transmission network. That is what the Premier's bills brought to the Parliament several weeks ago when they were introduced, including the Intergenerational Fund Bill, in fact do. The Premier's plan is about keeping the lights on. It is about protecting consumers, including pensioners who will receive appropriate indexed rebates. It is about maintaining jobs, which have been guaranteed to people in the retailing and degeneration industries. It is about protecting the environment, and I believe $100 million in the Renewable Energy Development Fund is directed towards that.

Looking at it objectively—putting my economist's hat on—this plan involves keeping our lights on at no cost to the taxpayer without privatising the essential electricity infrastructure assets, such as the power poles and wires. It protects consumers, jobs and the environment, and it releases literally billions of dollars for schools, hospitals and public transport, which are so necessary to keep the State running. It is necessary to provide for the future of our children, our children's children, and our present constituents. At the end of the day the proposed electricity reforms will also help maintain the State's triple-A credit rating. I believe we are striking the right balance with our electricity reforms and securing our future energy supplies at no cost to the taxpayer, while keeping our exiting energy infrastructure in public ownership. Lest there be any doubt, I fully support the Premier's plan to secure the State's future electricity supplies. I commend this important bill to the House.

Mr GRANT McBRIDE (The Entrance) [12.49 p.m.]: I support the legislation, but I make it absolutely clear that I remain opposed to privatisation of power. Today is not the time for an extensive debate, but I assure members that when the main debate occurs, I will participate and make it clear why I do not believe privatisation is good for working families throughout Australia, particularly working families on the Central Coast. I take that view because of the privatisation experience throughout the world. Privatisation of power in Great Britain has led to increased prices being paid by ordinary working people for electricity. In Europe, privatisation has had the same result. The experience in New Zealand is that privatisation of power resulted in a mess and also has led to increased prices being paid for electricity by working families. In Victoria, privatisation was an absolute catastrophe in the mid-1980s. Subsequently, it led to the defeat of the Kennett Government.

In 1999 the Victorian Labor Opposition went to an election in total disarray and with an unknown brand new leader—a leader with experience similar to the member for Manly. The then Victorian Leader of the Opposition had been leader of the Labor Party for only six months but won the election—over the privatisation issue—and Labor has been in government in Victoria ever since. The point I make is that electricity privatisation has been proved not to work for working families in the country in which it originated, Great Britain, and in Europe, America, New Zealand and Victoria.

While I am on the subject of the Opposition, last week on the Central Coast a meeting of approximately 500 power workers took place. It was wonderful to see the member for Terrigal and the member for Upper Hunter, each with hand on heart, saying that they would totally oppose privatisation of energy in New South Wales. The problem with the New South Wales Opposition is that every day is a new day, and a new day presents a new position and a new policy. It will be interesting when the substantive debate is held later this year to hear the position of the Opposition at that stage. That will be the true test of the Opposition on this issue.

Mr MICHAEL DALEY (Maroubra—Parliamentary Secretary) [12.52 p.m.], in reply: I thank all members who contributed to the debate, which has been colourful and, shall I say, a foreshadowing of events to come on another day, perhaps. However, what I hope is not being foreshadowed is continuation of some of the inaccuracy that resides within the privatisation issue. Judging by some of the contributions made to the debate today, those inaccuracies continue to surround the issue.

The first item I wish to make clear is the form of the generators or the fate of the generators, if and when the Government successfully has the Electricity Industry Restructuring Bill 2008 and cognate bill passed by Parliament. Repeatedly throughout the debate the assertion has been made that privatisation is a sale, but members ought to have regard to the Electricity Industry Restructuring Bill 2008, particularly part 2 clause 4. Contrary to some of the assertions made by members, particularly crossbench members, during the debate, the restructuring of the electricity industry has not been sprung on members. The Electricity Industry Restructuring Bill 2008 and the cognate bill were tabled by the Premier and have lain upon the table of the House for almost a month. Members have had plenty of time to peruse the bill's provisions. Clause 4 states:

This Act authorises the transfer to the private sector of State electricity assets in any of the following ways (and in no other way):

(a) the lease of the power stations of an electricity generator and the transfer of the rest of its business,

(b) the transfer of the retail business of an electricity distributor,

(c) the transfer by initial public offer of the business of an electricity generator (including its power stations).

What form may power stations take after the industry is restructured? They can take no other form than that which is set out in the bill. They may be leased by the Government, in which case the generator, the building in which it is housed, the machinery, and the land upon which it is situated, will remain in public ownership, which is the case currently, or may be transferred by initial public offer to a newly created company that will be listed on the stock exchange and probably have its headquarters in Sydney. The mums and dads of New South Wales and Australia will own the shares of that company.

Mr Mike Baird: Poor devils! That is still a sale.

Mr MICHAEL DALEY: The Government is not denying that, but there are only two ways in which the generators can be dealt with, and that is set out in the bill in clause 4 to which I have referred. The form of the tenure of those generators will depend upon a number of things, most significantly the advice that is offered by the Auditor-General after the bill is passed and, secondly, most importantly it will depend upon what is in the best interests of the taxpayers and residents of New South Wales. In determining the tenure that applies to generators, the Government will have regard to the best value and maximum benefit for the people of New South Wales.

Contrary to some of the assertions that have been made and continue to be made within and without the House, there is no mention in the Electricity Industry Restructuring Bill 2008 of the Government's reticulation system. Let me state very clearly what has been said many times by the Premier, the Treasurer and others but has not quite sunk in yet: currently the reticulation system in the New South Wales Government energy industry is owned lock, stock and barrel by the people of New South Wales—every pole, every wire, every frame, every transformer and all other assets, every employee, of which there are almost 11,000, and every one of the many hundreds of apprentices is either owned or employed by the people of New South Wales, and every single last item and individual will continue either to be owned or employed by the people of New South Wales.

Moreover, over the next four years the Government will spend, according to forward estimates, $9 billion to ensure that the reticulation system, the poles and wires that deliver electricity to homes and businesses are as modern as those of anywhere in the world. That $9 billion is currently being spent on maintenance and improvement so that, as is the case today, when a storm occurs anywhere in New South Wales and a pole or wires come down and a consumer picks up the phone to contact the call centre of an electricity retailer such as EnergyAustralia, Country Energy or Integral Energy, when restructuring occurs, consumers will be speaking to someone in Australia, either on the Central Coast, in Queanbeyan or somewhere else in Australia, and that call centre will dispatch someone employed by the Government to fix the poles and wires that are owned by the people of New South Wales.

Furthermore, by any measure the electricity distribution sector is the largest sector of the New South Wales electricity industry. Contrary to some of the quite scurrilous furphies that have been circulated and continue to be circulated about the $1.5 billion in dividends received by this Government from the assets it owns in the electricity industry, the overwhelming majority of revenue, almost $700 million in dividends, is derived from the Government's natural monopoly in poles and wires. That will continue to be the case.

Mr David Harris: They are the facts.

Mr MICHAEL DALEY: As the member for Wyong correctly states, they are the incontrovertible facts that are set out in black and white in the Electricity Industry Restructuring Bill 2008, which has lain upon the table for almost a month. The other furphy put about in respect of this bill is that there has been insufficient scrutiny allowed to this House and to the public in respect of the oversight of the Auditor-General. This is a very simple bill; it contains a single philosophical proposition: Do you think it is a good idea to have the Auditor-General involved in the oversight of the electricity transactions before they are voted upon by this House? It is not difficult. I would be surprised if there was a single member of this House who did not agree that that was a sound proposition.

Also underpinning this bill is our desire for the Auditor-General to look at the transactions as soon as possible. Every day we delay and, as the member for Miranda said, every day that these retail industries owned by the Government are allowed to continue trading is a day that dollars are lost to the taxpayers of New South Wales. We want to get the Auditor-General working on this issue as quickly as possible. In respect to the role of the Auditor-General in this legislation, it should be made clear that the Auditor-General has always been and will always be a statutorily independent officer. There will be no change to his tenure in this bill. All this bill does is enable him to examine the transactions before they are put before the House, and it confers upon him additional supplementary powers that are set out in clause 3 of schedule 1 to this bill. I will not go through them in detail; they are there for all to see.

It needs to be remembered and repeated that the Government's plans to secure the future energy needs of this State are the most important economic initiatives to be undertaken in this State in decades. This legislation supports the Government's plans and represents the culmination of more than 12 months of inquiry and consultation that will continue to proceed. A number of amendments have been made to the Government's proposals, and these have been made at the suggestion of the trade union movement, the community and environmental groups. This bill will provide additional authority for the Auditor-General to report to the Parliament on the Government's proposed electricity strategy. It will be an accountable and appropriately scrutinised transaction process. As has been clear throughout this debate, the Government has adopted a sensible and practical approach to delivering an outcome that is clearly in the best interests of the people of New South Wales. The Government has been determined throughout this process to ensure that it develops a package that enjoys the widest possible support. The provisions of this bill create time and space for the Auditor-General to review the Government's strategy and report to the Parliament before the commencement of any transactions.

In the past week criticism has been made of the Government about its willingness to work with the Coalition in respect to the content of this bill. I believe that to be one of the strengths of democracy. It is true to say that it does not happen very often in the Westminster system but when it does, as is the case today, a bill is put before the House and passed, and it has the overwhelming support of all members of this House. The member for Manly has foreshadowed he will move amendments to the bill. We agree with those amendments, and the bill will be stronger for them. I commend the bill to the House.

Question—That this bill be now agreed to in principle—put and resolved in the affirmative.

Motion agreed to.

Bill agreed to in principle.

Consideration in detail requested by Mr Mike Baird.


Clauses 1 to 4 agreed to.

Mr MIKE BAIRD (Manly) [10.45 a.m.]: I move the Coalition amendment:

No.1 Page 3, schedule 1 [2] (proposed clause 1 (2) (a). Omit all words on lines 29 and 30. Insert instead:

(iv) the impact of the proposed national emissions trading scheme (including current hedging and coal contracts of State electricity corporations),

(v) the sale price of the assets that is reasonably expected having regard to professional advice and the Government's preliminary estimates,

(vi) the impact of increased debt over the past 5 years in relation to the assets,

(vii) any relevant Commonwealth legislation regarding competition or foreign ownership,

(viii) any other factors that may impact on the potential sale price of the assets.

As we heard in debate this morning, there is some angst among many members about this whole process. Today the New South Wales Coalition is very proud to have secured the Auditor-General to look at this transaction independently. The concerns of the members reflect concerns in the community. The role of any member in this House is to enable community concerns to be addressed and, most importantly, to make sure that they understand the issues being debated in this place.

The Coalition also understands the concern of the Independents because, whilst it pushed for the amendments and is supportive of this bill, it believes in due process. It is very difficult to ask the Independent members in this House to understand this bill in its entirety in the very short time frame that has been provided by the Government. I believe that due process and good legislation are achieved by giving everyone the most information available in an independent form and also by allowing sufficient time for them to consider the proposed legislation. The Coalition acknowledges their concerns.

I will not go through the amendments word by word, but I will point out the thrust of what the Coalition is trying to achieve for the people of New South Wales in this independent overview of the bill. The Coalition asked for the impact of the proposed national emissions trading scheme to be considered. As I said in the agreement in principle debate, that potentially could cost the people of New South Wales billions of dollars. We need to understand the timing, the impact and whether right now is the best time to undertake this transaction when we do not know what the National Emissions Trading Scheme is going to add, in cost, from all these generators, which may mean the people bidding may be either scared away or may provide a price that is not in the best interests of the people of New South Wales.

The Opposition has also asked for independent assurance on what is a true and fair value for these assets. The people of New South Wales should not rely on a press release that says they are worth X dollars. They should rely on independent experts' advice so that when the transaction is executed there is an independent expectation of the worth of the assets. The Opposition supports the tenets of the private sector becoming involved in this industry but the assets should not be sold at any cost or at any time. An independent assessment would help the Opposition understand how this transaction fits within that context.

The Opposition has spoken about the impact of increased debt. Over the past five or six years the debt for electricity generation assets in particular has increased significantly, which is almost another form of a hollow log. Electricity generation assets have ramped up dividends back to the Government while the debt has been increasing, but at the same time the Government has not invested strategically in the infrastructure of these assets or in the capital expenditure of these assets. The Opposition wants to know what will be the impact of the sale price on them. The Coalition is concerned also about, and has asked the Auditor-General to investigate, issues of competition and foreign ownership in this transaction, and any other factors that may impact on the potential sale price of the assets.

The Coalition is proud to have delivered the bill to this House, makes no bones about being responsible for its delivery and thinks the people of New South Wales deserve to have before the House all the information that sits with this Government. Members need to understand independently whether this transaction to sell the electricity assets to the private sector is in the interests of the people of New South Wales because that is the basis upon which the Opposition will judge our position on the legislation that will come before the House at some stage down the track. The Opposition is proud that the people of New South Wales will have an independent view of the facts before the House.

Question—That the amendment be agreed to—put and resolved in the affirmative.

Amendment agreed to.

Schedule as amended agreed to.

Consideration in detail concluded.


Motion by Mr Michael Daley agreed to:

That this bill be now passed.

Bill passed and transmitted to the Legislative Council with a message seeking its concurrence in the bill.