Anne McEwen (SA, Australian Labor Party) Share this | Hansard source

On behalf of Senator Xenophon, I seek leave to incorporate his speech on this bill.

Leave granted.

The speeches read as follows—

I take this opportunity to express my serious concerns about the impact and long-term consequences of the privatisation of state assets.

I acknowledge the intent of this bill is to encourage states to invest in infrastructure projects by way of incentive payments from the Commonwealth upon the sale of state assets. I question whether this plan is short sighted and not in the interests of Australia's competition policy.

In June this year Mr Rod Sims, Chairman of the Australian Competition and Consumer Commission expressed concerns that competition has taken a back seat in the recent wave of state-owned asset sales.

He pointed to the ACCC's recent rejection of AGL's application to acquire Macquarie Generation, Australia's largest electricity generator, as an example. In a media release dated 4 March 2014, Mr Sims said:

The proposed acquisition would result in the largest source of generation capacity in NSW being owned by one of the three largest retailers in NSW. Indeed, with this acquisition, the three largest retailers in NSW would own a combined share of 70 to 80 per cent of electricity generation capacity or output. This is likely to raise barriers to entry and expansion for other electricity retailers in NSW and therefore reduce competition compared to the situation if the proposed acquisition does not proceed.

The Australian Competition Tribunal approved AGL's application to acquire Macquarie Generation's assets, despite the ACCC's warnings that 'the proposed acquisition is likely to mean that consumers will ultimately pay more for electricity, receive lower quality service and be offered less choice.'

Time will tell whether the ACCC's warnings should have been heeded. Unfortunately it will be consumers who will be the first to feel the pain if the ACCC's predictions about electricity price rises are correct.

Mr Sims has also stressed that it is vital state governments must be 'vigilant in setting up competitive structures when they privatise their assets.' The recent sales of some ports have seen the ACCC receive complaints that these ports have been privatised without appropriate open access regimes.

As a member of the South Australian parliament in the late 1990s, I vehemently opposed the privatisation of the then Electricity Trust of South Australia (ETSA). Not only because it was a broken promise of the then Olsen government but because it was also a bad deal for consumers.

I believe the privatisation of ETSA was structured in such a way as to maximise value of the state's assets, thereby reducing a greater amount of state debt (a legacy of the former Labor State Government), but by doing so it shifted the burden onto households and businesses with dramatically higher power prices post-privatisation. I received very sound advice back in the late 1990s from Danny Price, then at London Economics, who is now Managing Director of Frontier Economics. He was vilified by the state Liberal government at the time for his modelling and predictions of power price rises with the privatisation model adopted, and sadly his predictions were uncannily accurate. I should add, the accuracy of his modelling and predictions has not changed over the years given his concerns over the carbon tax and the CPRS legislation introduced by the former government.

If all the privatisation is doing is shifting public debt onto households and businesses then it seems to be a foolish and counterproductive exercise.

However, in the event that this bill does pass, I would like to see it passed with material improvements and for that reason I put on notice I support the amendments proposed by the opposition in this regard.

If taxpayer money is being used to encourage the privatisation of state assets, we have a duty to ensure the public—especially, families and small businesses—do not end up footing the bill by way of higher prices.