Waste Recycling and Processing Corporation (Authorised Transaction) Bill 2010 (No 2)

About this Item
SpeakersHarris Mr David; Baird Mr Mike
BusinessBill, Message, Bill Introduced, Agreement in Principle, Passing of the Bill, Motion

Page: 21702
    Bill introduced on motion by Mr David Harris, on behalf of Mr Michael Daley.
    Agreement in Principle

        Mr DAVID HARRIS (Wyong—Parliamentary Secretary) [10.34 a.m.]: I move:

        That this bill be now agreed to in principle.
    The Waste Recycling and Processing Corporation, which trades as WSN Environmental Solutions, or WSN, operates a State-owned waste collection and processing business. The purpose of Waste Recycling and Processing Corporation (Authorised Transaction) Bill 2010 (No 2) is to allow the Government to transfer WSN to the private sector. The Government announced in late 2008 that it intended to investigate the possible sale of WSN. Expert financial, legal, tax, accounting and environmental advisors were appointed to undertake a comprehensive strategic review of WSN, which considered factors such as the suitability of a transfer to the private sector and the proposed transaction structure. Following the completion of this review, the Government announced its intention to proceed with the transaction and consequently is now tabling enabling legislation.

    The Government has decided to proceed with this transaction for a number of important reasons. Firstly, the sale of WSN addresses the inherent conflict between Government being both owner and regulator of this business. Secondly, WSN operates in an increasingly competitive market along with private sector operators, who are best placed to make the significant technology development and capital investment necessary in this growing industry. There is growing demand for alternate waste technology facilities that serve the critical function of diverting waste from landfill and form an important part of the Government's waste strategy. While WSN has taken a lead position in the development of alternate waste technology facilities, the Government believes the private sector is best placed to make the significant investment that will need to be made over the coming years.

    As part of the bill the Government has committed to report on how the transaction complies with the Government's waste management strategies and also to address any outstanding competition issues. Taxpayers will benefit by shifting the need for this additional investment from the public sector, and the whole community will benefit through the investment of the sale proceeds in the priority areas of health, education and transport. It is important to note that the transferred business will continue to be managed in accordance with strict environmental regulations regardless of ownership.

    I turn to the detail of the bill. Part 2 of the bill authorises the transfer of WSN to the private sector. To provide flexibility, part 3 of the bill authorises the transfer of WSN to the private sector through various methods: firstly, through direct vesting of assets and liabilities; secondly, through the conversion of WSN to a Corporations Act 2001 company and the subsequent transfer of its shares; and thirdly, through the establishment and transfer of a new company. The bill provides the Treasurer with the necessary powers and functions to affect the transfer to the private sector via one of these means. The bill includes a provision allowing the new owner to be excluded from the payment of State taxes relating to this transaction, such as stamp duty.

    It should be noted that section 52A of the Conveyancing Act 1919 does not apply to a contract for the sale of land that is entered into for the purposes of this transaction. In clause 19 of the bill it is made clear that provisions in the State Owned Corporations Act 1989 do not in any way prevent, restrict or otherwise limit the carrying out of this transaction. This applies also to the Waste Recycling and Processing Corporatisation Act 2001. There are also provisions to allow for the repeal of that Act after the successful completion of the transaction. In addition, the bill establishes the Waste Assets Management Corporation, which will retain and manage sites not transferred to the new owner as part of this transaction. The Waste Assets Management Corporation will be under the direction and control of the Treasurer.

    A general manager will be appointed for the day-to-day running of the corporation, and staff may be employed under chapter 1A of the Public Sector Employment and Management Act 2002 to enable the corporation to carry out its duties. After discussions with the Opposition, the Government has agreed to direct cash and other assets sufficient to cover the provision for rehabilitation and future maintenance costs associated with the landfill sites to be managed by the corporation. These maintenance and rehabilitation costs are accounted for as liabilities in WSN financial statements. These liabilities will be determined by an independent technical expert, as occurs now. This will enable external verification of the fund balance.

    A key part of this bill relates to employee protections for those currently employed by WSN. The bill authorises the transfer of employees to the private sector and the continuation of their existing leave and superannuation entitlements, as well as a three-year employment guarantee for permanent employees. Temporary employees will receive a guarantee for three years or to the end of their fixed term, whichever occurs first. The bill also empowers the Treasurer to provide transfer payments to those employees who choose to move across to the private sector. The bill includes a provision to enable permanent and temporary WSN employees to remain with the public sector, if that is their preference.

    The bill introduced today is part of the Government's responsible program of transferring non-core assets to the private sector to strengthen the State's financial position. In turn, this improves the Government's ability to focus more resources to core social services such as health, education, roads and transport. Significantly, it also addresses the Government's conflict of interest as owner and regulator of the WSN business. While divesting ownership of WSN, the Government will continue to regulate the waste industry in New South Wales to minimise the impact of waste facilities on the community and the environment. I commend this bill to the House.

    Mr MIKE BAIRD (Manly) [10.41 a.m.]: I support the Waste Recycling and Processing Corporation (Authorised Transaction) Bill 2010 (No. 2). My contribution to the debate on the previous bill was clear. Therefore, without taking up too much time of the House I shall refer only to a couple of points. Certainly, the Opposition supports the argument that this business needs to be sold. I support the comments of the Parliamentary Secretary and the Treasurer that being both owner and regulator in an industry presents a clear conflict of interest. This bill aims to remove as much of that conflict as possible. Presently, the waste industry is experiencing increasing competition and requires significant investment in new technology to improve environmental outcomes through reduced landfill and other matters. I commend the Government on its strategy to sell this business.

    The Opposition's contribution has always been to try to be constructive. I acknowledge the Treasurer and his office for listening to and acting on our concerns. We spend much time in this place pointing fingers at each other and raising concerns about policy, politics and the like. This transaction has been undertaken with a sense of goodwill to try to achieve the best outcome for the people of New South Wales. The spirit and cooperation in which negotiations have been undertaken, notwithstanding the odd misunderstanding of process and procedures, are testament to what should happen if the Government is really trying to secure the best results for those whom we try to serve, the people of New South Wales.

    I am pleased that the Government has included the two amendments that the Opposition proposed. The first amendment reflects the concept that if a business or entity is sold, it is not fair to leave behind future liabilities to be met from future budgets, thus taking money from elsewhere across a State budget. Our strong argument has been that all liabilities—contingent or otherwise, future or current—should be met from the sale of any entity. We are pleased the Government has agreed to establish a trust account for that purpose. This means that the proceeds of the sale will help to meet all liabilities retained within the business.

    We hope that, in the continued spirit of good management and good governance, the Government in executing this sale will not try to impose other forms of debt or legal costs on the new entity to get around this clause of the bill. We understand that is not the Government's intention. Our concern is that all outstanding landfill liabilities, whether contingent or legal, are met by the proceeds of this transaction. That is the substance of the first amendment and I repeat that we are glad the Government has supported our initiative.

    We note also that the Treasurer will prepare a report on a range of concerns as detailed in the second amendment. The shadow Minister in the upper House will provide the detail on that amendment. This is a complex transaction with many variables and difficulties. We trust the Government will be cognisant of the report on environmental outcomes, competition, and incorporation of consumer protection. No doubt the concluding response of the Treasurer will reflect good governance, good process, and ultimately the best outcome for the people of New South Wales. The Opposition certainly supports this bill and the proposal, with our amendments.

    Mr DAVID HARRIS (Wyong—Parliamentary Secretary) [10.46 a.m.], in reply: I thank the shadow Treasurer and member for Manly for his contribution to the debate on the Waste Recycling and Processing (Authorised Transaction) Bill 2010 (No 2). As most members on both sides of this House would agree, the case for transferring WSN to the private sector is compelling. The sale addresses the potential conflict of interest of the Government being both owner and regulator of this business. Further, it allows the Government to focus on policy and regulation to protect the environment and ensure the sustainable management of waste for the benefit of future generations of Sydneysiders. We have heard how the regulatory framework for the waste industry has been strengthened in recent years to encourage greater resource recovery. In turn, this has driven the increase in demand for alternate waste technology—or AWT—facilities to divert waste away from landfill, which is an important part of the Government's waste management strategy.

    The development of alternate waste technologies is an essential part of the Government's strategy to help meet waste diversion and reduction targets. Further investment in alternate waste technologies is critical, but the Government strongly believes that this should be met by the private sector, not the public purse. As an added protection, the Government will report back on how the transaction complies with its waste management strategy, including the development of alternate waste technologies. Following discussions with the Opposition, the Government has agreed to direct sufficient cash and other assets to cover the provision for the rehabilitation and future maintenance costs associated with the landfill sites, which will be retained in government ownership.

    That provision will be allocated to a specified fund to be managed by the Waste Asset Management Corporation after the sale of WSN. A provision is made for these rehabilitation and future maintenance costs in WSN financial statements and will be verified by an independent technical expert. Of course, WSN will be subject to the same stringent environmental regulations that apply to each and every operator in the waste industry. Put simply, these regulations are about ensuring a healthy and clean environment; they apply to every company that holds a contract in New South Wales. In relation to the second part of that amendment regarding competition, the House has already heard about the competitive nature of this industry, with several companies involved in both waste collection and waste processing in the Sydney metropolitan area.

    In addition, it is important to remember that the Australian Competition and Consumer Commission will review the sale, which is the usual practice, to ensure competition objectives are met. The Government has committed to report on any outstanding competition issues. This will ensure that ratepayers get the benefit of competition, which drives efficiencies in the waste sector, to the advantage of all. The Government is pleased to support the amendment, which is entirely consistent with the Government's robust strategy for the ongoing regulation of the waste industry and for the sale itself. I again thank members for their contributions to this debate. 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.
    Passing of the Bill

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