ELECTRICITY RETAINED INTEREST CORPORATIONS BILL 2015

Dr HUGH McDERMOTT (Prospect) [5.34 p.m.]: I oppose the Electricity Network Assets (Authorised Transactions) Bill 2015 and the Electricity Retained Interest Corporations Bill 2015. Every few years Labor and the Liberals decide to privatise the electricity industry. It is amazing. I remember having these debates, but not in Parliament. In the 1990s electricity privatisation was opposed time and time again not only by the unions, as has already been said, but also by the people of New South Wales. Bob Carr, Michael Egan and Morris Iemma did not get to do it, but now the Liberals and other Coalition members want to do it.

Mr Matt Kean: And Kristina did not get to do it either.

Dr HUGH McDERMOTT: Kristina Keneally failed as well. Every Labor Premier failed because it was a bad idea. It is as simple as that. The reason that it was constantly resisted is the negative impacts it will have on everything in New South Wales. Let me examine the negative implications from the poles and wires sale for the Prospect electorate. The first issue is affordability for households, which is a matter of huge concern for the people of Western Sydney, who endure summers that are far hotter than the conditions experienced by households in Willoughby or Hornsby. They do not have the advantage of coastal breezes that are enjoyed by people who live in Manly and in other beach suburbs. Many people in Prospect will miss out on the simple luxury of air-conditioning because of electricity price increases. The people who use air-conditioning the most in Western Sydney are families with children who live in detached houses, and they will bear the brunt of increased power prices if poles and wires are sold off.

Based on estimates from the Australian Energy Regulator in 2014, electricity transmission and distribution costs account for 66 per cent of a typical New South Wales residential customer's electricity bill. Any changes in cost structures made by the privatised poles and wires companies will have direct flow-on effects to the electricity bills of typical residential households in Western Sydney. According to the McKell Institute's report, under private ownership of the electricity industry New South Wales customers would experience an increase in their electricity bills ranging from $38 a year to $103 a year over five years or, for the benefit of Government members, a total of approximately $350 over that period. Given that nearly half, or close to 46 per cent, of families in Prospect have a weekly income of less than $1,500, price rises would be a significant imposition on their cost of living.

The next issue I will address is this Government's blackmailing the people of New South Wales to fund infrastructure. The Government is saying to the people of New South Wales, "You have to agree to selling the poles and wires, or we will give you nothing." Services in my electorate require ongoing public funding, much of which comes from revenue generated presently by poles and wires, which must remain in public hands for that system to continue. This Government is short-sighted and looks only towards winning votes in the next elections rather than planning for the future. Take as an example Fairfield Hospital, which is situated in the electorate of Prospect at Prairiewood.

It is a well-run facility with a dramatically undersized emergency department. Fairfield Hospital desperately needs an upgrade, although this Government will hold it hostage until it achieves its agenda of selling off poles and wires. The reality is that this Government refuses to acknowledge that Fairfield Hospital will require more upgrades in the future—long after the power grid, the poles and wires and the revenue have gone. Fairfield Hospital can be upgraded under Labor's alternatives, which were discussed during the election campaign and which Labor still supports. The hospital can be upgraded without selling the power grid, but the Government does not care.

Let me cite another example. Girraween Public School also desperately needs permanent buildings, as do so many other schools in Western Sydney, including those in the Prospect electorate. Nearly all the school's playgrounds and open space have become fields of demountable classrooms. The children have issues with excessive heat in summer, the cold in winter and the risk of illness from mould that grows more easily in demountable classrooms. What if there is a fall in power prices? The Government says there will be money, but what if there is a shortfall? Will Girraween Public School be crossed off the list for funding as the money is allocated to tax cuts for the big end of town? Why is the Government standing on the podium hailing the wonders of cutting corporate tax while remaining quiet on the public education front? I am sure the Premier did not have to attend any classes in demountable buildings at The King's School—and nor should the students at Girraween Public School or any other State school.

The Government wants to sell off poles and wires and, at the same time, increase TAFE fees threefold for struggling students. Where is the logic in that? Why does the Government need to rip off TAFE students when it supposedly has more than $13 billion in its pocket? There will also be direct implications for workers and their employment because of the sale. Based on the latest census data, 13 per cent of employees are employed in the manufacturing sector in Prospect, close to 8 per cent are employed in construction and more than 10 per cent are employed in the retail trade—all industries in which electricity is a significant cost component. Rises in electricity prices from the poles and wires privatisation may undermine the viability of local businesses such as Cadbury Schweppes, Boral, Arnott's and a number of other large industrial manufacturers in the estates in the area. There is no question that industry will suffer.

Prospect is home to the State's largest industrial precinct, filled with one-person workshops and factories for some of the world's largest corporations. They will suffer as the costs of running their workplaces skyrocket. I fear that at the lower end of the scale the small businesses that the Liberal Party supposedly stands for in this House will be forced to shut. Large factories may be forced to lay off hundreds, perhaps thousands, of staff across the electorate. I fear for the families who will be affected by the sale of poles and wires. I have made many criticisms, but what about alternatives to selling the poles and wires? There are plenty of alternatives—

Mr John Sidoti: Name them.

ACTING-SPEAKER (Mr Lee Evans): Order! The member for Drummoyne will come to order.

Dr HUGH McDERMOTT: I thank the member for Drummoyne; I am very happy to name them. There are more viable ways of raising the capital to build infrastructure than through privatising poles and wires. A McKell Institute report, entitled "Nothing to gain, plenty to lose", claims that there has been "little consideration to alternative methods of funding the investment beyond its plan to sell off the network businesses". In its paper the McKell Institute supports asset dividend flow to assist infrastructure spending. It also recommends borrowing as an alternative, highlighting the reduced risk to the State's credit rating as a notable benefit. It claims that the credit rating agency Standard and Poor's places a significantly higher weighting on the ability of governments to keep their recurrent revenue above their expenditures than it does on the overall level of debt held by each government. Those opposite criticise the McKell report. Let us look at an entity that is not a Labor think tank, Market Economics.

ACTING-SPEAKER (Mr Lee Evans): Order! Members will come to order. The member for Prospect has the call.

Dr HUGH McDERMOTT: Market Economics published a paper entitled "The Way Forward: Public Electricity, Public Infrastructure, Public Benefit", which endorses retaining 100 per cent public ownership of the New South Wales electricity network assets as an alternative. This would include establishing a dedicated infrastructure fund by hypothecating 30 per cent of government income from the New South Wales electricity network, which would deliver approximately $3.56 billion for a new infrastructure fund over the next 10 years. This would result in the retention of some $8.3 billion in future government revenue from the electricity network over the next 10 years. The paper also argues that borrowing may be a more viable alternative to privatisation, pointing to 10-year bonds being issued at rates of less than 3 per cent. Compounded biannually over 10 years, the paper reports that it would cost $51 million for every $1 billion borrowed.

Do the short-run gains from the sale outweigh the long-run value of dividend and income tax equivalent revenues? Even if the Government managed to sell the poles and wires for a seemingly high price, even if it gets $20 billion, it might represent a poor deal for taxpayers because of this foregone revenue. Poles and wires general government revenue has been significant for the State, averaging nearly $1.3 billion since 2010-11. According to the 2014-15 budget papers, the State's electricity assets were expected to pay more than $1.17 billion in dividends and income tax equivalent payments this financial year. [Extension of time agreed to.]

In conclusion, the privatisation of our electricity assets is a mistake. Government members love to talk about the march of history and how important this transaction is. It will be important; the legislation will be remembered—it will be remembered for getting rid of one of the greatest assets in this State and for slashing the income of many households because of it. These bills should be opposed by all members of this House.

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