2014-05-06
Madam Speaker Purick took the Chair at 10 am.
Madam SPEAKER: Honourable members, I advise of the presence in the gallery of two Year 5/6 classes from St Paul’s Catholic Primary School, accompanied by Louise Peyton, Phillipa Pond, Dee Hicks and Jo Ryan. On behalf of honourable members, welcome to Parliament House, and I hope you enjoy your tour and time here.
Members: Hear, hear!
Madam SPEAKER: Honourable members, I have given permission to Sky News, Channel 9, ABC, a private photographer and the NT government photographer to cover the swearing in of the new member for Blain.
The CLERK: Honourable members, I lay on the table the writ issued by Her Honour the Administrator, Ms Sally Thomas AC, on 16 April 2014 for the election of a member for the electoral division of Blain on 12 April 2014, and certifying the election of Mr Nathan Barrett.
Mr Nathan Barrett made and subscribed the oaths required by law.
Madam SPEAKER: On behalf of members of the Legislative Assembly of the Northern Territory, I congratulate you on your election and welcome you to the Assembly as the member for Blain.
Members: Hear, hear!
Madam SPEAKER: Honourable members, I have received Message Number 15 from Her Honour the Administrator notifying assent to the bills passed during the March sittings. The message is dated 28 April 2014.
Mr GUNNER: Madam Speaker, I move that a leave of absence for today, tomorrow and Thursday be granted to the member for Nightcliff on account of personal matters.
Leave granted.
Mr ELFERINK (Leader of Government Business): Madam Speaker, I seek leave, whilst there is no question before the Chair, for the member for Blain to make his inaugural speech in the Assembly for no more than 20 minutes.
Leave granted.
Madam SPEAKER: I welcome to the Speaker’s Gallery Mrs Rebecca Barrett, the wife of the member for Blain; master Micah Barrett; master Amos Barrett, Miss Isobel Barrett - the children. I also welcome David and Jessica Barrett, the parents of the member for Blain; Mr Ian Fleming and Mrs Kym Fleming, the parents of Rebecca Barrett; Mr Barry Coulter, a former member and Deputy Chief Minister of the Northern Territory Parliament; and Mr and Mrs Bob and Suzanne Cavanagh. Welcome all.
Members: Hear, hear!
Mr BARRETT (Blain): Madam Speaker, I begin by thanking those who have been a great support to me in my life generally, and, more specifically, in the recent Blain by-election.
I thank my family, starting with my parents, David and Jessica, who are here today. They are long-term Territorians and instilled in me a devotion and commitment to serve people and to be visionary in my outlook on life. Thank you to my wife, Rebecca, who is my best friend and confidant, my children and my extended family, who are also here today.
I publicly thank my campaign team for all of its hard work, planning, support and advice given during a tough campaign. I especially thank Barry Coulter and Terry Mills for the legacy they have left, their support for me as I move forward in this journey and continue to work for and serve the people of Blain.
I thank the volunteers and other supporters who gave time, effort and often prayers throughout the campaign. They believed in me as a candidate, and the plan the government has for the future of the Northern Territory.
I thank the people in the electorate of Blain for their support. Without them, I would not have the honour of standing here today. To them, I pledge that I will serve the community and the Northern Territory with my heart, mind and strength, so help me God.
I am very proud to have the opportunity to serve my community and the Northern Territory. I was born at the other end of Mitchell Street from where we are now, the site of the old Darwin hospital. I grew up in Darwin admiring people who represented the Territory in sport and other capacities, be it Teal Cup teams, Pan Pacific Games competitors or political representatives. I often wished I could do something for the Territory and proudly wear the colours of the flag, black, white and ochre.
After completing high school at Kormilda College, I went on to complete qualifications in economics, science, education and finance. I have a range of employment experience in education, small business, finance, governance and logistics. I have learnt a great deal from these experiences in my life, and all of these now dovetail as I embark on this new adventure. I have been given the opportunity to do my part, try my hardest, give it all for the successful future of the Territory, and as they say in football, ‘to leave it all on a field’.
This opportunity eclipses what I dreamt of as a young lad, watching my peers take the field to represent the Northern Territory in sporting events. It allows me to be a part of something greater in framing our future.
I do not believe there is anything amazing about me. I am not the smartest or strongest, the most skilled or qualified. I certainly do not stand head and shoulders above my colleagues, as they are all pretty tall. I was asked if I knew how Wicking would draw me. I replied that he has been drawing me for weeks, but I was too short and did not manage to get into the frame. I believe in integrity, justice, mercy and humility, and whatever grace has been given to me, I will use to serve.
I have a very strong connection with the Northern Territory; the landscape amazes me. I am blessed to have had the experiences I have had, be it long, flat roads in the Barkly, the stunning colours of the Centre, fishing at Goulburn Island, the floodplains in the north, the smell of rain in the Wet Season, the brilliant lightning storms and sunsets and its wildness and harshness, the very paradox that makes the Territory both formidable and beautiful.
It has many wonderful characters that make it a very special place, the people who have made the culture of the Northern Territory so unashamedly and proudly unique. It has Indigenous people and their culture that I came to learn about, not from the popular culture of our day, but from Kormilda College. I made lifelong friendships and saw Indigenous culture and people as accepting, kind and friendly at heart. My time at Kormilda changed my perception from being afraid to being a friend.
Immigrants have come from all over the world, like my mother and her family. If we look from A to Z, from Afghans who came out with camels to transport cargo across the desert – which is why the train that comes to Darwin is called the Ghan – to Zimbabwe, from where we welcome people looking for a new start, and the Asian cultures that bring colour and flare to the Northern Territory. The keen historical mind will note that when supply ships came to the Top End from Adelaide, laden with food for the fledging town, they were occasionally shipwrecked on the Western Australian coast. It was Asian people from Indonesia, Malaysia, Timor and China who saved the town on more than one occasion, because they were the only ones growing food. The southern European cultures, predominantly from Greece and Italy, brought more diversity with hard work, humour and optimism, not to mention Greek Easter and the Glenti. These cultures were infused into the Northern Territory in that most people who grow up here learned Greek words at school that are now a part of our vernacular. Together, all of our cultures have created the amazing culture that is the Northern Territory, but that does not mean it is without its problems.
Our past is not without bloodshed and tragedy as our cultures collided, and I believe we are still healing from our past. Wrongs have been done to our brothers and sisters, and this legacy remains in the collective psyche of our Territory. War, cyclones, floods, fires and droughts have often been the furnace that forged people together and created a kinship that underpinned unity.
The city we stand in today has been devastated three times, twice by cyclone and once by war. Three times, it has gotten back up, picked up the pieces and reinvented itself. That is a reflection of people across the whole of the Territory, who have a goodness about them. The heart of the Territory is one that beats for a future. It is one that sees potential and wants to realise it, can take setbacks and still have the determination to move through. My heart beats in time with hers.
The electorate of Blain has people from the whole spectrum of culture that is the Northern Territory. It is with the history of our Territory in mind, and with great pride and humility, I now begin to serve the people in this capacity.
In the electorate I am working on a Food for Life program in Moulden, hand in hand with community groups, council, businesses and government institutions to build a sense of community and help those who need it to get up, go again and move forward.
In Woodroffe I am working with the community, sourcing new options to utilise community purpose land that will add to the amenity of the community. In Rosebery and Bellamack I am working with community groups to give wings to their visions for more community events that bring people together to enjoy the environment we live in, and to make connections between neighbours we hope will create relationships and community spirit.
I have met with school principals and want to support them in any way I can to showcase the excellent job they do. I am excited by the visionary direction principals in the Palmerston area are taking to reframe the community, encourage belonging, fight the very destructive forces of self-pity and a victim mentality, give students more than education, with connections to traditions of our past and a sense of who they are in our community, give them a cause to rally for a future beyond themselves and raise their eyes to see opportunities to help others in the community.
Having met with police, I am committed, as they are, to ensuring people can enjoy living in Palmerston without the fear of crime and antisocial behaviour. As Barry Coulter and Terry Mills before me, I am committed to building the physical and social infrastructure necessary to ensure Palmerston continues to be a great place to live. In different ways both of these men are an inspiration to me, and I understand I have big shoes to fill. With my Palmerston colleagues, Lia Finocchiaro and Peter Chandler – who have also been inspirational me – I am excited about taking the city to the next level. We will do this together as part of the Country Liberals plan to develop northern Australia. We have the scope and ability to see the Northern Territory closer to achieving its potential to build on our strengths and improve our weaknesses.
Strength, unity and purpose are the keys to success in most things. Strength and unity without purpose is pointless. Like a fortress that guards nothing, it is strong, tight and formidable, but has no reason to exist. Strength and purpose without unity will fail because a team of champions will always be beaten by a champion team. Individuals in a football team who can rise above themselves and put the goals of the whole club and fan base above their own, and do all they can together for the realisation of those goals, will always operate to their highest potential.
Purpose and unity without strength will fail because it cannot move forward. It is like a great idea with no vehicle to activate it; it is the toothless tiger, the committee with great ideas and no authority to execute change.
The political events that occurred in the Northern Territory during and at the conclusion of the Blain by-election affirmed this government with the strength of numbers to move forward. It is now unified in that members of this government are able to build teamwork, to work with and for each other and the people of the Northern Territory as a whole to realise our potential. It is now able to move forward with a purpose and plan to develop northern Australia. May we use this strength, unity and purpose with great wisdom.
A cursory look at the Northern Territory’s history will show the mining and pastoral industries, as well as the public service, have been the main drivers of development. I am excited we are situated in a prime location and time to take advantage of our proximity to a developing Asian market.
We must learn from the mistakes of the past and move forward, adding health, education and agriculture to the mainstays of the Northern Territory economy. We must have the audacity and tenacity to be visionary, see the path and mark out steps towards health facilities that reach across the top half of Australia and into Southeast Asia, a health sector that affords the best care for all and a model of innovation and excellence that breaks the paradigms of the past.
We must learn from mistakes like the Adelaide River floodplain rice project, and not quit, saying, ‘Agriculture cannot work here’, but intelligently develop agriculture industries where we have a natural advantage of soil type, water resources and proximity to markets in Asia with expanding demand.
We want to have an education model which attracts students across the whole region, encourages innovation in industry and fosters improvements in industries we have, making the Northern Territory a leader in those industries. We want to develop our cattle industry and export potential for access to markets in Asia, encouraging innovation and improvement in the industry to maximise our competitive advantage. We also want to encourage mineral resource development and innovation in extraction and processing that will create opportunities for employment and model best practice in our mining and oil and gas sectors.
What if students in the Territory were able to make advances in our industry processes because we encouraged innovation to build into them a sense of their responsibility – to move their world forward and not sit back assuming entitlement. What if they had an ingrained desire not to take but to contribute, and to know they must take responsibility for forward movement, not just sit back and assume it will all happen around them – to do hard things like the NTU solar car team that developed a more efficient electric motor, like Dr Ben Hoffmann, who identified that ants can be used as environmental indicators, and to take risks, like our young businessmen and women who are acting on their ideas and creating businesses and employment in the Northern Territory.
This sort of thing does not just happen. Innovation is like an arrow. Our innovators are like the point; they have a hard, sharp edge and want to hit a target, but a point needs the body or shaft of the arrow. These are the structures we put in place to facilitate their ideas. The feathers at the back provide direction, and this is where advice is important, not naysayers, but people who will guide their ideas to see them happen. Innovation needs the whole system to work. Using our natural resources, our strategic location and our human resources, we have an opportunity to advance the future for our children with jobs that have meaning and a lifestyle that becomes the beautiful Territory we live in.
I am heartened by the federal government’s realisation that northern Australia must be developed. It is my hope that in this place, at this time, on our watch, we do everything we can to promote the future, encourage ideas to set up structures that assist innovation, growth and development, and provide guidance for those ideas. Nothing unites people like a cause, and I am excited to be part of a government which can provide the vision and purpose the Territory needs to move forward. I am excited because there is a wisdom that shows serving and leading can be the same thing. I am excited to have this opportunity to serve by leading and to lead by serving.
Thank you, Madam Speaker.
SUSPENSION OF STANDING ORDERS
Debate Public Accounts Committee Report on Power and Water Legislation
Ms LAWRIE (Opposition Leader): Madam Speaker, I move that so much of standing orders be suspended as would prevent this House from debating the Public Accounts Committee report into splitting the Power and Water Corporation. I will talk to my motion to suspend standing orders
Mr Elferink: Madam Speaker, is she not supposed to seek leave at the outset?
Madam SPEAKER: Opposition Leader, are you seeking leave to suspend standing orders?
Ms LAWRIE: I am seeking leave to move that so much of standing orders be suspended as would prevent this House from debating the Public Accounts Committee report on splitting the Power and Water Corporation, and I speak to the motion to suspend standing orders.
Madam SPEAKER: If you are seeking leave to suspend …
Mr Elferink: It is not a motion. She is seeking leave.
Ms LAWRIE: No, I am moving to suspend standing orders. I am not seeking leave.
Mr Elferink: You must seek leave.
Madam SPEAKER: Member for Port Darwin, please be seated. Opposition Leader, you must seek leave. Are you seeking leave to suspend standing orders?
Ms LAWRIE: Yes.
Leave not granted.
Continued from 13 February 2014.
Ms MANISON (Wanguri): Madam Speaker, it is a shame the government has decided to push through these bills today without allowing the Public Accounts Committee process to be completed by finalising its report, after what has been an incredibly rushed process already. The report could have been put before the parliament for more scrutiny and to show transparency in regard to these bills. The government does not have the grace to allow the Public Accounts Committee to do this and is ramming through this legislation today.
It is a shame. You will not allow debate on it either. Given the government is not allowing the process to be completed and we are here today, having to go into the bills …
Mr Vowles: What are you running over there? It is unbelievable.
Mr DEPUTY SPEAKER: Can we have a bit of order on the opposition side? You are already on a warning, member for Johnston, as is the Opposition Leader.
Mr Vowles: No, I am not.
Mr DEPUTY SPEAKER: You are now.
Ms MANISON: I will respond to the Power and Water Corporation Legislation Amendment Bill and the changes to the Government Owned Corporations Act before the Assembly.
I will be upfront and clear in outlining that the opposition will not support any of these bills to split Power and Water, or the changes to the Government Owned Corporations Act. We stand united; this is not in the best interests of all Territorians. It is part of the government’s thinly veiled privatisation agenda for Power and Water.
I will speak plainly; every member of this Assembly has an interest in this debate and the government’s plan to split Power and Water. This will not deliver cheaper power, water or sewerage for any Territorian. Experiences elsewhere show this will drive up the price of power, water and sewerage for everyone.
This will not mean increased reliability of services for Territorians. It is well known that when structural separation or privatisation takes place, investments in repairs, maintenance and infrastructure decrease. This means more blackouts, more water outages and more issues for everyone. This will mean a reduction in the number of staff working at Power and Water.
The Treasurer’s said earlier this year on ABC radio:
By his own words, The Treasurer has confirmed that he expects staff cuts as part of structural separation, which will put more pressure on the hard-working staff at Power and Water, and increase their workloads. The changes to the Government Owned Corporations Act before the Assembly will give the shareholding minister of Power and Water, the Treasurer, access to a raft of new powers which will enable him to sell or transfer assets of part or all of government owned corporations.
This bill seeks to give the shareholding minister power, by regulation, to transfer assets of Power and Water Corporation, the Power Generation Corporation or the Power Retail Corporation as he pleases.
He will not even have to bring it before parliament for scrutiny. Most disappointingly, like the move to split Power and Water in the first place, the changes to the Government Owned Corporations Act will mean the government does not have to consult with Territorians. The shareholding minister can transfer Power and Water assets with a simple tick and flick.
If this bill passes today, we are on the road to the sale and privatisation of Power and Water assets currently owned by Territorians. These bills before the Assembly are an attempt to structurally separate Power and Water Corporation as it exists today, to strip out two components from the current corporation that have potential for private sale due to their capacity to run profitable margins and attract buyers, that is, stripping out the generation division and its valuable assets and the major contestable customers of the retail section within the Power and Water Corporation.
Left within the Power and Water Corporation will be sections which do not have the same capacity to drive profits. The power networks section, water services, corporate services, system control and remote operations – which services Indigenous Essential Services – will stay together within the Power and Water Corporation monopoly. The gas section will also remain there to start with, and I will touch on that later.
There have been questions about how this will impact bills and power token costs for people in urban centres and the bush. The Treasurer has made it clear numerous times in the media, and in the Chamber, that he wants Power and Water to work like a profit-driven commercial business. In a media interview one year ago, he said, ‘The situation is Power and Water are selling electricity for cheaper than they produce it and we are pouring enormous amounts of government money into Power and Water, subsidising people’s electricity right across the Northern Territory. There is a misconception out there that it is only the remote people and seniors being subsidised. The fact is, all Territorians are.’
He went on to say, ‘When you are selling a product at a lower price than you are producing it for, government contributions continue to increase in order to maintain that business. Something has to be done.’
On May 14 2013 in this House, the Treasurer gave a response to a question about the commercial sustainability of Power and Water. He said:
In this Chamber, over time, the Treasurer seems to be coming clean about what the government intends to do to Power and Water. In this Chamber in December he said:
But in February 2014, the Treasurer performed a huge backflip, and this sheds light on the true intent of this bill. On 11 February, when asked important questions by the member of Nelson about the future of Power and Water, he said:
The CLP government is following the tried, tested and failed model of many other jurisdictions. It is the pathway towards privatisation. Despite the denials of government, its language on the issue seems to be changing as we get closer to the breakup of Power and Water. The government chooses its words carefully about whether it is selling the Power and Water Corporation and the new Generation and Retail Corporations. However, one only has to look at last Saturday’s NT News, and listen to some of the responses to questions asked today in relation to the sale of assets to see it. It is clear future assets are on the agenda in the Territory.
The government presented three bills to parliament during the February sittings to split the Power and Water Corporation. It initially tried to put these bills through together, which would have severely limited parliament’s ability to scrutinise what was before us. Thankfully at that time, and thanks to pressure from the opposition and the Independent, the government agreed to put these bills through separately.
However, if the government had its way, these bills would have already passed in March, based on its strength of numbers. Due to internal unrest and chaos, and an unexpected by-election in Blain, these bills have had to wait, rather than being rammed through during the last sittings with minimal scrutiny. The Public Accounts Committee, with its new power of self-referral, has a chance to hold an inquiry into the bills before us. However, this process has been incredibly rushed, driven largely by this government’s determination to separate Power and Water and ram these bills through with as little scrutiny as possible.
The process of the Public Accounts Committee did not leave me feeling any more confident these bills are the way to go. It highlighted what a rushed process this is and the massive deficiencies in this legislation. Today we are debating these bills in the Assembly, before the PAC process has been allowed to run its course and before we have put the PAC report of its findings to parliament for debate. It is a disgrace that the government is still going forward and ramming these three bills through parliament today without allowing that PAC process to be finished.
It was hard to believe the Power and Water Corporation, Treasury or NewCo, the key agencies processing these changes by government, were unable to show the Public Accounts Committee any evidence these changes will benefit Territory businesses and families. No one could provide any cost-benefit analysis, risk analysis or evidence to show any quantifiable benefits to Territorians. No evidence at all could be presented in these areas. It was clear the work had not been done. There is no evidence to support that this is the right path to be following regarding the future of billions of dollars of Territory infrastructure and investment.
However, these bills do make it somewhat clearer as to why the government is heading down this path, with no evidence or analysis to back up any tangible benefits. What we are debating also includes significant changes to the Government Owned Corporations Act, which will provide the minister with unfettered powers to transfer the assets of the Power and Water Corporation to other entities. These changes alone should constitute their own separate debate, but the government has incorporated them into this bill with the Power and Water Corporation Act.
The minister’s second reading speech is silent on the significant amendments to the Government Owned Corporations Act. Honourable members can draw their own conclusions about that omission.
There are significant changes to the Government Owned Corporations Act which give the shareholding minister, the Treasurer, the ability to transfer assets within a government owned corporation, or even an entire government owned corporation itself.
This leaves the soon to be established Power Generation and Power Retail Corporations looking vulnerable. The changes to the Government Owned Corporations Act look to insert section 53A, which gives the shareholding minister a raft of new powers. Under proposed section 53A there is a definition of what a relevant entity is, which includes:
Why does a relevant entity need to include a subsidiary? Why must it include a statutory corporation? Why does it include a corporation as defined by the Corporations Act or any other body corporate? It begs the question: why is the government seeking such broad capabilities to transfer Power and Water assets?
Under proposed section 53B there are some clear powers given to the shareholding minister to transfer assets to relevant entities. It says:
This legislation is effectively giving the government a blank cheque to do as it pleases with the assets of Power and Water Corporation, as well as the Generation and Retail Corporations.
Under proposed section 53T there are ministerial directions inserted which further support the minister having the ability to direct the government owned corporations as he pleases. Proposed section 53T reads:
What would remain within the Power and Water Corporation is essential to every Territorian. Power and Water services are essential to all of us, our communities and the growth of the Territory. Yet the government is going down the path towards privatisation and this, ultimately, means less reliable services and higher prices for customers.
There is a fundamental difference in how we see Power and Water compared with the views of those opposite. We see it as an essential service. We see it as a service all Territorians are entitled to have access to at an affordable price. We believe the staff of Power and Water work hard, take a lot of pride in their work and know what they are doing is essential to all of us. We value and respect those workers and the skills and professionalism they bring.
The Treasurer and some of those opposite see the Power and Water Corporation as a basket case. They see it as inefficient and bloated. They call it a dog’s breakfast. The Treasurer believes Power and Water has too many staff, and they have too much equipment to do their job. The Treasurer expects the breakup will mean a reduction of staff. He has no appreciation of how hard people work at Power and Water. He also knows fewer staff will mean less reliability of services for everyone.
Within the new look Power and Water Corporation the government is proposing to leave water services, power network system control, gas, corporate services and some aspects of the existing retail section within this government owned corporation. There will also be the remote operations section, which services Indigenous Essential Services and provides the vital power, water and sewerage services to remote communities, which will stay within the Power and Water Corporation.
These changes to our essential services provider are being rammed through with no mandate from or consultation with Territorians and no real proof to show anyone we will be better off as a result. There is no evidence or report to show Territory taxpayers how breaking up Power and Water will make the service better, more reliable or more affordable. This is a government hell-bent on following the road of privatisation and selling off what it can. It is in its DNA. It is quite happy to sell what it can and has made that very clear.
We have heard its federal counterpart, Treasurer Joe Hockey, is placing more pressure on jurisdictions to sell assets, and Treasurer Tollner has signed up to that. Only last week we saw the Chief Minister sign up to that agenda with his COAG colleagues. Following on from that, it was very interesting in Question Time today to hear him place on the record that the government is not ruling anything in or out, and he is looking forward to the ongoing debate on the sale of assets.
In Saturday’s NT News the Chief Minister said asset sales should be looked at. He said:
I repeat the last part:
To members opposite who do not believe the split of Power and Water, and this legislation in particular, is about a privatisation agenda and heading down the road of selling Territory-owned assets, my message is simple: wake up! It is what it is all about, and this bill will enable the government to privatise Power and Water. This will mean higher power prices and less reliability for your constituents. The agenda is very clear; those who do not believe it need to take their heads out of the sand.
As stated earlier, in the Territory Treasurer’s rhetoric we have also heard his desire to make Power and Water run like a commercial operation. Under structural separation there will be business divisions left within the Power and Water Corporation which may not be as lucrative as generation and some of the big retail customers, but are essential to every household, business and the quality of our lives.
In March we saw what happens when there is a major problem in power networks and system control when the lights went out in the Darwin and Katherine region. A large part of the Territory ground to a halt that day. Businesses lost stock and trade, people lost wages, schools and childcare centres closed and the public service was not operational. Everything was impacted. It was a stark reminder to us of what happens when the power goes out and why it is essential we continue investment in infrastructure to ensure reliability for customers.
One must question whether investment in Power and Water will continue at the same level. Will the repairs and maintenance program continue at the level we need it? Fewer repairs and less maintenance means more outages for customers, lost trade and lost business. Staff are at risk when they go out on the job and are dealing with faulty equipment. The CLP has already stripped money from repairs and maintenance. In 2012-13, Labor had forecast a repairs and maintenance budget of $87m for Power and Water.
After the CLP took power, the spending reduced to $80m and we now see it at $78m. This is a worrying trend and something which must be carefully monitored through this splitting exercise. Less investment in the Power and Water Corporation will ultimately mean less reliability of services to Territorians. It is also concerning to hear internal training programs have been scrapped under the CLP. These were designed to help staff deal with the highly complex, and at times, highly dangerous, nature of their jobs.
One aspect of this bill I am concerned about is the government’s level of commitment to the quality of power, water and sewerage services delivered to remote communities through Indigenous Essential Services and the remote operations section of the Power and Water Corporation. People in the bush have already shared skyrocketing increases to the cost of power. All Territorians have shouldered the increases together - the urban centres and the bush - and prices will not become any cheaper under the structural changes proposed today.
In the Territory, in recognition of the fact power, water and sewerage are essential to every one of us, we have had a long-term policy of honouring subsidies to make electricity, water and sewerage services affordable. This means people have been protected from the real costs to receive those essential services. In the Territory we have unique challenges in delivering services. Much like the cost of petrol and groceries, the large distances, small population and isolation makes things more expensive to deliver, and the case in remote communities goes to a whole new level.
The government has tried to calm the bush and its Caucus members by telling them there will be no changes to Indigenous Essential Services, which will help keep the price of power and water at a more affordable level. In Question Time today we asked questions with regard to a $5m to $6m shortfall, and we know existing arrangements in place for Indigenous Essential Services are only there for another two years. In two years’ time, what will happen to power, water and sewerage prices in the bush? What will happen to repairs and maintenance in two years’ time, and what will happen to future infrastructure investment?
There is no certainty going forward, and the structural separation will strip money from Power and Water Corporation, leaving more pressure than ever before on community essential services. We have a growing population in remote areas. Plenty of babies are born each year and numbers are growing in the remote communities. This means we cannot drop the ball and lose focus in remote essential service delivery and infrastructure. There has been significant investment in upgrading infrastructure in recent years, but there is much more to do and not all communities have benefited from changes.
Under the changes to Power and Water, will the government continue investing in remote community power, water and sewerage to ensure people in the bush receive the services they need and deserve? When Power and Water continues to have tight budgets in the future, will the government make remote community essential services a priority, or will work in places like Ramingining, Palumpa and Yuendumu be put into the too hard basket? I cannot see how people in the bush will benefit from the split; it will mean they pay more for power and see less investment in their essential services infrastructure in the future.
The structural separation is not anticipated to attract competitors in the bush or have any benefits for people there.
The power networks division is a critical part of the Power and Water Corporation and one of the sections facing the greatest challenges due to ageing equipment and infrastructure. After the events of the Casuarina Zone Substation incident, we learned it is best to be open, accountable and transparent when things go wrong to prevent them happening again.
After the events at the Casuarina Zone Substation and the findings of the subsequent Mervyn Davies report, a strong investment in power networks infrastructure followed. Under the changes the government is ramming through with the breakup of Power and Water, any private retailers or generators will still need to access the networks infrastructure. The government has claimed that having a monopoly over the power network is the key component of the new look Power and Water Corporation being able to make money. It has succeeded in putting up prices in the networks tariff increase, and the Utilities Commissioner has now handed down the networks price determination. Approximately 30% of the networks tariff has been approved, and this will be in place from 1 July.
In Question Time today, the Treasurer was asked what that will mean and if those costs will be passed directly on to the customer as of 1 July, and about how they will find the required funding and subsidy for that. We were not given an answer, or any indication as to how the government plans to deal with that issue. It would be nice to have some information on the record about what the government is doing to deal with the network price determination before us.
Given the age and size of the distribution networks, it is one of the areas which requires most investment. If the government does not address networks issues like the ones we have seen recently, it will not matter how many generation providers or retailers you have; we will all be left in the dark.
It is essential that investment in power networks to continue repairs and maintenance programs and the upgrading of infrastructure is done as required and needed. The government has already set a worrying pace with the reduction in R&M spending at Power and Water. Given it is stripping out generation and retail at Power and Water Corporation, there will be a reduced ability to access revenue to fund power networks.
We have not seen any financial modelling or cost-benefit analysis of how structural separation will benefit power networks. No matter how many retail-owned generation competitors you have in the market, if the network goes down everything will fall apart. There needs to be strong, continued investment in the distribution network, and we need an ongoing and sustained commitment to this. We also need an ongoing and sustained commitment to staff within power networks and system control, and the training they deserve as part of their highly dangerous and technical jobs.
The structural separation on the table also has elements of shared service provision between the new Retail Corporation and the Power and Water Corporation. Shared service provision: staff subject to the changes have only recently been told what is happening at Power and Water, and management has told us everything is looking rosy ahead of the 1 July implementation of structural separation.
When you talk to people in Power and Water affected by the changes you do not get the same story. They will tell you people have their heads down and morale is at an all-time low. They see the changes in the split as unnecessary, and driven by a shareholding minister for his own reasons.
Power and Water’s senior management and chair have been very clear they are implementing and following the will of government and will not comment beyond that. It does not come across that there are many glowing supporters of the changes.
It will be interesting to watch the transition from June 30 to July 1 and see how the planned shared services arrangements between the new GOCs and Power and Water operate. It is clear staff have had to do a lot of work, planning and preparation for this from within Power and Water. As we all know, issues are not always anticipated. Within these changes, the future of system control and the gas unit has also not been determined. Documents state that once Territory wholesale electricity market arrangements are open to third party retailer generators, the power system control function will be separated from the monopoly GOC and, subject to Cabinet approval, the gas purchasing function will be separated from the monopoly GOC.
It will also be interesting to see what happens to the gas unit within Power and Water which secures and contracts to purchase gas. Will separating it from Power and Water in the near future mean gas that was secured for Territorians is sold as another short-term cash-grab without the long-term interests of the Territory in mind? That will be another space to watch with this split.
As we recently saw with the system black outage in the Top End, system control needs more support. Staff need more training and access to resources to help them with their complex and often stressful jobs. Alarmingly, tier training had already been cut from them under the CLP.
Given the government intends to remove them from Power and Water entirely, it will be of great interest to see what support and investment it puts into system control going forward.
I am also keen to know if affected Power and Water staff will have much say on their future. At the Public Accounts Committee hearing, Power and Water Corporation representatives confirmed that, as of today, it has 1053 full-time employees. I would like to break this down to put on the public record, as of today, what Power and Water’s full-time employment numbers were as of 24 April 2014.
In the non-operational business units, there are 211 staff: 150 in generation; 325 in power networks; 166 in water services; 90 in remote operations; 78 in retail corporations; and system control has 33.8.
It is important we place the number of staff within Power and Water on the record today so we can best monitor how things go within the monopoly government owned corporation and the two new government owned corporations in the future.
Many staff were left surprised that the government was quick to roll over the existing Power and Water enterprise bargaining agreement for a shorter period of time and that EBA is set to expire next year. Upon expiry of that agreement, when staff are divided into the Power and Water Corporation, the Power Generation Corporation and the Power Retail Corporation, what will happen to wages and conditions?
For now, government is saying there is nothing to see here and all transferred staff will be heading to the new corporations on the same wicket. However, they will be subject to new management, a new board and new structures. What will happen to them after that? It is fair to ask the same question to staff within the Power and Water Corporation who will also be subject to changes and restructures.
Staff are worried, and it is little wonder their morale is at an all-time low when they have been subjected to cannings by this government time and time again.
They have had their professional reputations trashed by this government; their highly respected and experienced managers have been sacked or moved on to other places and they have seen their board sacked. They have seen highly respected, hand-picked members of the interim board walk away and resign.
The staff talk, and they were all fired up after the recent attacks by the Treasurer on them around the Utilities Commissioner’s report into the catastrophic blackout in March. He went to town on the staff of the Power and Water Corporation, and it was a disgrace. It is little wonder staff are not feeling too optimistic about their future, especially given the experience in other jurisdictions, where splits have taken place and led to fewer staff.
It has also taken a long time for the government to answer questions about the cost of structural separation. Until recently we were asked to believe the Treasurer’s $2m figure, which he plucked from thin air after being pushed by the media, but we have since heard this was not the full figure. It is clear in the NewCo project governance document of January 2014 that budgets did exist for the separation of Power and Water Corporation, and were in place and forecasted on a best case scenario.
There were also clear stipulations that if budgets are to be altered, the shareholding minister must sign off on them, and the budget presented by NewCo would be revised after the legislation goes through. I read that as a sign the current budget, presented to the Public Accounts Committee, will go up.
For two years alone, NewCo is forecasting the budget at $6.8m, and this contained a Power and Water component of $435 000. Power and Water, however, claimed at the Public Accounts Committee that the budget was actually $2.2m for structural separation this year alone, so the best case estimate at this point is $8.6m for the split.
Debate suspended.
Madam SPEAKER: Honourable members, it is with deep regret that I advise of the death, on 12 December 2013, of Mr Raymond Chin OAM. Raymond was involved in the Northern Territory RSL, the Chung Wah Society, worked as Clerk of the Northern Territory Legislative Assembly and was a great and true Territorian.
I advise honourable members of the presence in the gallery of Mrs Jade Chin, his widow; Mr Michael and Mrs Jill Chin, brother and wife; Mr Brian Chin, son; Mr Russell and Mrs Diane Trimble, son-in-law and daughter; Ms Katrina Trimble, Ms Emily Jong, Ms Jessica Jong, granddaughters; and Mr Graham Chin.
Other family members have also taken the time to come here today: Mrs Darwina Fong; Ms Bonita Fong; Mr Danny and Mrs Sandra Markovic; Mr Gregory Chin; Mr Austin and Melanie Chin; Mr Oswald and Mrs Siew Chin; Mr John Chin; Mr Gordon Chin; Mr Brian McPherson; Mr Ian McPherson; Mr Daryl Thomas; Mrs Darleen Chin; Mrs Leila Chin; Mr and Mrs Desmond Fong; Ashley and Tania Chin; Mr Matthew and Ms Maddison Chin.
Honourable members, other guests have also come today to pay their respects: past Administrator, Hon Austin Asche and Dr Valerie Asche; Hon Daryl Manzie and Mrs Maureen Manzie; the Right Worshipful the Lord Mayor of Darwin Katrina Fong Lim and Michele Fong Lim; Mrs Barbara Geddys; the Very Revd Dr Keith Joseph; Bishop Clive Wood; and Rev Pat Williams.
If there are other people who I have not mentioned I welcome you one and all for this condolence motion.
Mr GILES (Chief Minister): Madam Speaker, it is with deep regret that I note the passing of Mr Raymond Chin OAM, Chin Pak Jing, on 12 December 2013, and pay tribute to the outstanding Territorian he was. Pak Jing Chin, or Ray as he was better known, was born in a village in Taishan, Guangdong province, China on 11 June 1923. His father was born in Darwin in 1901 and worked in the family store, Fang Cheong Loong, founded by his grandfather, Chin Toy, who had arrived in Darwin in 1883. His business associate was Chan Fon, whose son, Harry Chan, went on to become the first mayor of Chinese descent of an Australian city. The thriving store was situated at the end of the Esplanade facing the wharf, near what is now known as Harry Chan Avenue. Ray’s mother, Sue Wah Chin, initially remained in China whilst her husband, Chin Ack Sam, worked in Darwin, but she came to Australia with Ray and his older brother, Eric in 1928.
Ray attended Darwin Public School, which had a total of 150 students at that time. He returned to China in 1932 and attended Pui Ching Academy, a boarding school in Canton. Following the start of Japanese hostilities in 1937 and the bombing of Canton, Ray managed to return to Darwin at the end of 1938, completed his education, and started work for his grandfather as a shop assistant for five shillings a week.
He witnessed the bombing of Darwin on 19 February 1942. He remembered:
As the staff scurried into the trenches, Ray initially sheltered under a banyan tree behind the Anglican church, now Christ Church Cathedral, and watched the bombs drop; the MV Neptuna was hit as she unloaded her cargo of depth charges and armaments alongside Stokes Hill Wharf.
Two weeks after the initial attacks, Ray and his 80-year-old grandfather evacuated south to Katherine, which was also attacked on the morning of 22 March 1942. They continued south to regroup with the rest of the family in Adelaide.
Life for the young man became a matter of working in an ammunition factory by day and helping in the newly established family restaurant in Rundle Street at night.
Repeated attempts to enlist in the Army were frustrated as he was judged to be too small, so Ray directed his focus towards the Royal Australian Air Force.
On 16 December 1942, he was accepted for training as an airframe technician or flight rigger. After training in Victoria, Ray went on to become a member of No 15 Squadron, a Beaufort bomber squadron supporting the fighting in New Guinea.
There was one occasion when Ray’s sergeant ordered him to relinquish his seat on a plane at the very last minute; he was very fortunate as that plane was shot down over enemy territory.
Ray met his first wife, Olive, who was then secretary to the Chinese Consul, on a visit to the Young Chinese League in Little Bourke Street, Melbourne, prior to the war. They married in September 1947. Ray returned to Darwin in 1953, followed a few months later by Olive and their small children, Janice, Brian and Diane.
Their first home was with his mother, Sue Wah Chin, in the stone house in Cavenagh Street. As soon as he was discharged, Ray joined the RSL, or the Returned and Services League. It was the beginning of a long and loyal association with the RSL, which included 10 years as RSL secretary, services president and, eventually, life membership.
Ray was convinced that when you meet a friend in the RSL, you have them forever. He was instrumental in ensuring the RSL had a CBD headquarters, even offering his own block of land in Litchfield Street as collateral.
The Queen’s Birthday honours, announced on 11 June 1996, included the award of the Medal of the Order of Australia for Mr Raymond Chin, in recognition of service to the community, particularly through the Chung Wah Society, and to veterans and their dependents through the Darwin RSL.
With the same passion for involvement, Ray Chin was the first secretary of Northern Territory Legacy. Legacy was formed in 1962 as part of the Legacy Club of Adelaide, and it received its independent charter 11 years later. In all, Ray held executive positions with Legacy for 21 years. His association with the Chung Wah Society also dates back to the 1950s, initially through Olive, who was active on the committee as social secretary. He became a life member in 1981, but his time as president coincided with Cyclone Tracy, which literally blew the Chinese temple away. Tracy also destroyed the family home he had built himself in Litchfield Street. An energetic campaign of fundraising and rebuilding led to the reopening of the temple in Woods Street in 1977.
From 1975 to 1980, Ray was honorary secretary of the Darwin Bowls Club. In 1985, a press release from the Rotary Club of Darwin North flagged the formation of the Probus Club of Darwin to hold regular meetings and fellowship for the retired and semi-retired. It was no surprise that, on 4 September 1985, officially declared foundation members included Ray Chin.
He spent 32 years in the public service, once he returned to Darwin from Melbourne and Adelaide in the post-war years. He entered the Commonwealth public service in 1951, studied at night school and worked in various Australian government departments until 1968 when he was transferred to the staff of what was then the Legislative Council of the Northern Territory. Ray progressed from being the Clerk of Records to Clerk of Committees. In 1974, the Legislative Council was replaced by the fully elected Legislative Assembly, with 19 members, and he held the position of Clerk Assistant.
As I mentioned earlier, Cyclone Tracy destroyed Ray’s home and the Chinese temple, but Bernie Kilgariff, then Speaker of the Legislative Assembly, remembered the first sittings following the cyclone when Ray was a mainstay in getting the Chamber up and running all over again. At the time, the roof continued to leak, but Ray paddled through pools of water on the Chamber floor, carrying a tape recorder to record all proceedings of the day so we could have formal records.
Ray was appointed Deputy Clerk in 1978 and then served as Clerk of the Legislative Assembly from 1982 until his retirement on 7 September 1983, the first Australian of Chinese descent to hold such an office.
However, as all who knew him can attest, Ray never truly retired. He continued, throughout his lifetime, to be a pillar of the local community. His mantra was simple: we like to help people. Ray Chin’s story is without doubt a wonderful example of the major contribution the Chinese community has made to the city of Darwin. Ray’s first wife Olive passed away in 1977, and he is survived by his second wife, Jade, and two remaining children, Brian and Diane. To them, I say thank you for allowing your husband’s life to be shared with the Northern Territory and the rest of Australia. We thank you, Ray, and pass on our best.
Ms LAWRIE (Opposition Leader): Madam Speaker, I thank the Chief Minister for bringing this condolence motion, quite appropriately, to our parliament. Ray Chin OAM was staunchly proud of the Legislative Assembly of the Northern Territory, having served so diligently in positions including, as we have heard, Deputy Clerk and Clerk.
I extend my personal condolences to his family, to Ray’s widow, Jade, and Di, Brian, Russell and the grandchildren. Ray was someone I knew pretty much all of my life, having grown up around the old Parliament House building on this site, and he was someone I cannot remember not seeing. He was a very gentle man and a gentleman in the truest sense of the word. He had a very strict understanding of the rules and procedures of parliament and the precinct, and held them in the highest esteem and regard.
I feel very privileged to have known him since I was a child, as I feel privileged to play hockey with Di. I will contribute some words straight from Di during this condolence motion.
I also want to extend sincere condolences from my mother, Dawn Lawrie, who is overseas at the moment. She worked very closely with Ray as a former member of the Assembly in the years Ray was here. He diligently and truly served the people of the Northern Territory, ably assisting all members of the Legislative Assembly with a great level of professionalism.
He was an extraordinary man and true Territory treasure. He was incredibly dignified, with a beautiful dignified nature. He had impeccable integrity, his incredible work ethic and that abiding dedication to family. We see the Chin and Fong families here today, a very tightknit community in the Northern Territory.
It is truly difficult to see how Ray crammed so much in to the impressive life we are talking about today. I believe he was our most prominent Chinese community leader. We have heard he was a president of the Chung Wah Society, a position he held for two terms over 14 years. He was RSL secretary, a foundation member and secretary of Probus, and held that very distinguished position of which he was very proud, Clerk of the Legislative Assembly.
A true gentleman, he was as much at home in the company of politicians, Administrators, Lord Mayors or visiting dignitaries. He spoke Mandarin and Cantonese and was equally at home with his fellow members of the Chung Wah Society at a series of working bees.
As we have heard from the Chief Minister, Ray’s home and the Chinese temple were both devastated in Cyclone Tracy. I vividly recall the struggle, post-Cyclone Tracy, to protect the temple and the Chung Wah Society grounds from the bulldozers, and the fight the community had to ensure the temple was rebuilt. I know mum spent much time working with the community to ensure it would be rebuilt. She spoke very fondly of the great work Ray did as President of the Chung Wah Society and the efforts the community made, under his steerage, to fundraise and rebuild the temple.
What many may not know is that – along with some other prominent members of the Chinese community – he personally guaranteed the bank loan to fund much of the rebuilding. He certainly was a man of conviction.
After surviving the bombing of Darwin during World War II, Ray joined the RAAF; he was told he was too short for the army. He served on two missions in New Guinea during the war, one of just three Chinese-Australians in a squadron of 400. Although he was an aircraft airframe mechanic, he spent 200 hours manning a gun on bombers.
He was not a man who sought honours, but they inevitably came his way. He was bestowed with a life membership of the Chung Wah Society in 1981, and awarded – I think it was a very proud moment for him – that distinguished Order of Australia medal in 1996. He was very traditional, making sure the younger generation of Chinese Territorians maintained their culture, traditions and religion. He was a true leader, and led by example in all roles he fulfilled. Ray Chin’s contribution to our city, and more broadly to our Territory and the Chinese community, is legendary.
Playing hockey with Di, I told her there is sometimes a chance for your own words and views to be provided directly to a condolence motion debate. These are the words of Ray’s daughter, Di Trimble:
To the family of Ray Chin, thank you for sharing this magnificent Territorian with us. He will be very sorely missed. He was a beautiful inspiration to me growing up, and I feel very humbled and honoured to have participated in this condolence motion today.
Mr TOLLNER (Treasurer): Madam Speaker, I thank the Chief Minister for bringing on this condolence motion, and I thank the Opposition Leader for the beautiful words she spoke about Ray.
Ray was a good mate of mine, as he was to pretty much everyone he met. Listening to the Opposition Leader made me think of a book I read a few years ago about Queen Elizabeth. There was a quote in this book from a former Labour Prime Minister of England who, at the time, did not have a great like of the monarchy. When he first met the Queen, as prime minister, it was an interesting meeting, but the point he made was that he developed a deep respect and admiration for Queen Elizabeth. Whilst she was aloof from the political game, she understood and had an appreciation of the pressures which fall on prime ministers and people in power and authority.
This gentleman went on to explain how he could talk to Queen Elizabeth without any fear she would use the information in any political sense, but she always provided wise counsel. When the member for Karama mentioned that about Ray, I thought of that book because he was that sort of bloke.
He had a deep, abiding appreciation and respect for people in politics in particular – something that is rare these days – because he understood. It arose from his time as Clerk of the parliament. He understood the pressures people in public life often find themselves under, and he was a wonderful sounding board. I never knew his political persuasion, and I would be stunned if there were people here who could outline what it was, because he kept those cards very close to his chest. However, you could feel completely confident talking with him about the pressures of a job. He was President of the Darwin RSL from 2001 to 2005, which coincided with my time as the federal member in an electorate office across the road from the RSL. The RSL became my local and, consequently, I had a lot to do with Ray during lunch hours or after knocking off from work.
I first met Ray soon after arriving in Darwin. I joined the Freemasons in the early 1990s, and it was impossible to be a member of the Freemasons and not know of the legendary Ray Chin. We had quite a good relationship there. Freemasonry in Darwin will not be the same without him, and the Cattleman’s Bar at the Royal Darwin Show will suffer. It is always difficult finding volunteers to work behind the bar when the Royal Darwin Show is on, certainly from the Freemasons. Ray was a stalwart; you would be hard pressed to turn up to the Cattleman’s Bar and not see him there doing his bit for the brotherhood and waving the flag. He was a very proud Freemason.
The point made about how one person can seemingly cram so much into a life is a good one. Ray Chin did an enormous amount for the Territory, his family and community. He will be sorely missed. It is hard to imagine Darwin without Ray Chin; he was emblematic of life in the Top End and Darwin. He represented that easy going character. Popular in a multicultural society, Ray represented everything we aspire to be in the Top End. He will certainly be missed.
I thank the Chief Minister for bringing this on. I relish the opportunity to put on the record my thanks to Ray Chin for the time he spent with me in particular, but also the work he did for the Territory over so many long years. My fondest regards and deepest sympathies go to all Ray’s family and many friends who have come here today.
Mr GUNNER (Fannie Bay): Madam Speaker, Ray Chin OAM was a model Territorian and a true Territory gentleman. As Clerk of the Legislative Assembly, he served with great distinction. Without a doubt all members of this parliament can say Clerks are priceless, and Ray was priceless for more than just being a Clerk. He lived Territory values of hard work, community service, love and devotion to his family and a quiet can-do attitude. Ray just did, and never sought recognition. You only realise how much they took upon themselves and the size of the hole they leave behind when they leave us.
From talking with Ray’s brother, Michael, I know Ray had a leadership role within the family – a very large family. He was the second eldest of seven boys and four girls. Like others in this Chamber who have grown up in large families – not that large, but large – we know those within our families who take on responsibility to ensure things happen, wounds are healed and relationships are kept, no matter how far the family spreads. His filial piety, quiet dedication and leadership through deeds extended to his commitment to public service and the valuable contribution he made to the common good.
Ray’s humility, impeccable integrity and dedication to serving the community is well known, and speaking to this condolence motion today, we all pay tribute to the significant achievements he made during his life. His love of Darwin started in 1928, where he arrived with his family, aged five. Ray’s father, Sam Chin, was not born in Darwin, but he was born in China, where his father met and married Ray’s mother, Sue Wah Chin. Over the course of his life he came and went, but always returned to Darwin because this was home. He was born in China, in a village near the city of Taishan in Guangdong province. The Taishan region was the source of many 19th century Chinese migrants to Darwin, as well as other parts of Australia, the United States and Europe.
He was very proud of his heritage and education in China at the Pui Ching Academy in Guangzhou, where his family lived from 1934 to 1938. It was there he learnt fluent Cantonese to compliment his native dialect from the Taishan region. After the Japanese invasion of China in 1937, Ray and his family returned to Darwin in 1938. After witnessing the bombing of Darwin in 1942, he was forced to evacuate to Katherine, and then Adelaide, with his family.
Famously, Ray was apparently so upset at the bombing of Darwin during World War II – shielding his relatives in a ditch during Japanese bombing raids – that he enlisted. The Army thought he was too small, so he went across the road to the Air Force, which was smart enough to sign him on, and the RSL legend was born. He served in New Guinea, as a rigger and machine gunner. He was Secretary of the RSL for many years in the 1960s and 1970s, and president from 2001 to 2005. He was also Secretary and President of Legacy for many years from the 1960s.
A little-known secret of the bombing of Darwin is that it was a cultural and culinary victory for Adelaide, with the families of Ray’s parents and uncles starting what some say was the first Chinese restaurant in Adelaide, in Rundle Street. After a year, Ray’s family branched out and started a Chinese restaurant of their own close to the East End Markets, near the corner of Rundle Street and East Terrace.
Mother Nature should be glad there was nowhere for Ray to sign up to after Cyclone Tracy blew through the family home at 4 Litchfield Street, sheets of corrugated iron from Tall Tale Tex Tyrell’s shed whistling through the air on that frightful night.
His public service included working in this parliament for many years as the Clerk; that is how I first met Ray, through my mum, who works in the Legislative Assembly. I came to know Ray better as his local member. I saw him at the bowls club, where he also served for a while – I think Ray helped everybody at some stage – or at home with Jade, where he would turn the volume down on the Chinese language TV show, and we would talk about the Chamber, Lumpy, Gaddy, Darwin and life; he was always good to talk to.
Ray is well known for his tireless work for the Darwin Chinese community. It was for that work he received the Order of Australia medal as a two-term President of the Chung Wah Society from 1973 to 1978 and 1985 to 1995, but also as someone who was prepared to roll up his sleeves and get the job done, from the Dragon Ball to the satay stall, the New Year’s blessings to one of the never ending working bees, particularly the annual cleaning of the temple. Even in his 80s, he would be on his feet for four hours, cutting meat at the Chung Wah satay stand at the Royal Darwin Show.
Ray was known to members of the Chung Wah Society and the Chinese community generally as ‘Uncle Ray’, a sign of respect and affection for him as an elder of the community. Whilst the respect and esteem in which Ray was held across our community is well known, his commitment to the Chung Wah Society is best exemplified by the fact he was prepared to put himself on the line – along with several other prominent members of the society – as a guarantor for the bank loan required to fund much of the rebuilding of the temple after Cyclone Tracy.
In remembering Ray I want to pay tribute to the life of his daughter, Janice, who sadly passed away only two years ago. Jan was the Chung Wah Society’s general secretary. She too made a huge and lasting contribution to the society and is dearly missed.
I thank Michael for his generosity in sharing stories of his brother, Ray, and I thank Austin Chin and the Chung Wah Society for its help in drafting my words today. Ray’s values and deeds were a tribute to his Confucian and Christian beliefs, and his quiet respect for elders and family who had passed was seen through his dedicated observance of the Qingming Festival, a special day to honour relatives who have passed on by visiting their graves. Ray would always organise for extended family to go to grandfather Chin Toy’s grave in the Gardens Cemetery, and on to the general cemetery at McMillans Road.
The tradition has now passed on to his son, Brian, his daughter, Diane, and their families. Ray will always be remembered. I will finish with the moving words of his family – many of who are here today – which appeared in the NT News last December:
I extend my sincere condolences to Ray’s family and friends. May he rest in peace.
Mr STYLES (Transport): Madam Speaker, I sincerely endorse all contributions to this condolence motion. I would like to offer a quote that is well known in the Australian community:
We are the beneficiaries of so many things Ray Chin did for his community. People stay in the Darwin community and raise families because it is a great community. It is a great community because people like Ray Chin showed a great deal of leadership, all the way through his life from when he was a boy. We have listened to some of the fantastic things he achieved in his life.
I came to the Territory 33 years ago and I first heard of Ray Chin then. As a young police officer dealing with legislation you hear particular names, and Ray Chin’s was one of them. I was fortunate enough to have quite a number of conversations with Ray over the years, especially on Anzac Day and at various functions. He was always invited as an honoured guest to so many functions, especially around this House.
As a role model you cannot fault Ray Chin. He was a quiet man. After his sad passing I spoke to a number of people in the Chung Wah Society and they gave me some of the history. I will not repeat it – a lot has already been told – but it is through people like Ray Chin that this city has become the great place it is. The legacy of people like Ray Chin will be passed on to our children and grandchildren.
They will be able to enjoy the benefits of a fantastic multicultural city because of what Ray contributed through his efforts in the Chung Wah Society, the RSL, through the public service and by being the person he was. People often ask me, ‘Why do you live in Darwin?’ You only have to look at what we have in the Northern Territory, particularly Darwin. It is a unique city because of the contribution of Ray and the Chinese community he led. It is through those contributions this will continue. As a role model he showed all of us a particular way to live, to look after your community and the way to commit some time to your community to make it a better place.
I believe that Ray – in all of the conversations we had – had, at the forefront of his mind, that he was a role model, not only for his kids, but his grandkids and community. If we all live to the same values Ray chose to live by, we will have a very strong community and continue to have a fantastic Darwin and Northern Territory. My condolences go to you. Lest we forget Ray Chin.
Madam SPEAKER: I also extend my condolences and sympathies to the family and friends of the late Mr Ray Chin on his very sad departing. I extend sincere sympathies to you for what is clearly a great loss to not only close family, but all of his family and friends.
I pass on expressions of sympathy from the recently retired Clerk, Mr Ian McNeill, and his wife Kit. He has asked me to let honourable members know, as well as all visitors here today, that Ray was tremendous in his role as Clerk and Clerk Assistant of the Legislative Assembly, and a credit not only to the role, but also to the whole parliament. He took it very seriously, and Mr McNeill asked that I pass on his and Kit’s sympathies to you as well.
I have also been asked by my mother, Noel Padgham, to pass on her sympathies to you all on the departing of Ray. She too knew him from her time in parliament and she extends her sincere sympathies to you all.
Motion agreed to.
Madam SPEAKER: If we could now stand, honourable members and guests, for one minute’s silence.
I thank honourable members for their contributions to the motion. I invite the friends and family of the late Mr Ray Chin, as well as any members, to afternoon tea in the main hall. Thank you.
The CLERK: Madam Speaker, pursuant to Standing Order 100A, I inform honourable members that a response to Petition No 34 has been received and circulated to honourable members. Pursuant to established practice the text of the response will be included in the Hansard record and placed on the Legislative Assembly website.
A copy of the response has been provided to the member who tabled the petition for distribution to petitioners.
Continued from earlier this day.
Ms MANISON (Wanguri): Madam Speaker, We know there are significant costs with regard to structural separation. I expect this figure will rise, and it will be interesting to hear these revised numbers and where they have landed over the next few years, particularly through the estimates process.
We know these bills have the following cost implications: legal costs to establish the three new corporations; the cost of developing contractual arrangements between the new corporations; operational costs for the additional boards; ongoing additional executive and management expenditure, including salaries for the new CEOs and chief financial officers; the cost of consultants and advisors, and we heard through the Public Accounts Committee that advice was received from a range of legal advisors about that; and the ongoing annual cost of establishing, for example, separate support functions and systems rebranding. Given this separation will cost in the millions and there is no evidence of what benefits it could deliver, that is a concern. These costs will increase if there are unforeseen issues post-separation, especially around shared services provisions.
We have also heard little from the government about its desire to join the Australian Energy Regulator and what that will mean for the Territory and these three new government owned corporations. We have not heard whether this will mean an additional regulatory burden for the NT and what the joining requirements will be.
There are many questions the government has left unanswered about its move to break up the Power and Water Corporation, and I suspect we will not receive all the answers we need today. This bill, along with the two others, is being rammed through because the government has managed to maintain its numbers.
This model has been followed before in other jurisdictions. The government has shown no evidence or analysis on how it will benefit Territorians. It will lead down a path towards the sale and privatisation of valuable assets currently in the hands of Territorians. Once they are sold we will never get them back.
The shareholding minister is looking to obtain new powers to transfer assets and government owned corporations currently within the hands of the Territory. It will lead to higher power, water and sewerage bills, and it will mean less reliability of services, more outages and interruptions.
The Treasurer believes it will mean fewer staff for Power and Water, which he thinks has too many. Territorians will be hurt under these changes. They will further increase the cost of living, and they have had no say on the split or the future of Power and Water.
I urge members to think very carefully about what these changes to Power and Water will mean to the people they represent, whether they can continue paying more for power, water and sewerage services, and whether they want to see more black-outs in their homes and businesses. That is where we are heading. Many questions still need to be answered, and the government’s determination to ram this legislation through with no consultation with Territorians is a disgrace. They have been given no say on the future of their utility and this service, which is essential to us all.
I urge members to think very carefully about how they will vote on these bills, what it will mean to the Territory and to stop this rushed process. This process has been rushed; there has been no consultation. There is no evidence to show there will be benefits for Territorians, and in other jurisdictions it has led to higher prices and less reliability for all.
I urge members not to support this bill and the two bills which accompany it. The opposition remains opposed to this suite of bills. The opposition will not support these bills which will allow the shareholding minister to eventually sell assets owned by Territorians.
We will not support these moves by government which will hurt Territorians and see the cost of living further skyrocket for all.
Thank you.
Mr ELFERINK (Attorney-General and Justice): Madam Speaker, I start by pointing out a flaw in the argument of the member for Wanguri, who spoke stridently against this legislation. Despite the fact it has gone through the normal processes of parliament, she now claims it is being rushed, but there is an inherent flaw in her argument. She asserts two things: prices will automatically go up as a result of the separation of the Power and Water Corporation into its strict components, and we have not answered any questions and nobody knows anything about it.
If you compare those two assertions they cannot be reconciled, because if you use the logic of her first assertion, that all prices will go up as a result of this separation, and then apply her second assertion, that nobody has told us anything about it, she has defeated her own argument. By saying nobody has told people anything about it, therefore she knows all of these things will happen. This shows her argument is less founded on information, which I understand she and members of the opposition have been provided, and more on the presumption that structural separation will automatically lead to privatisation, which is all bad and wrong.
This government could not have been clearer at any stage; this will not go down the path of privatisation, but it is going down the path of creating more competition. Shock horror we should have more competition in the Northern Territory for supplying electricity! There are three components to structural separation: generation, network and retail. This may come as a huge surprise to members opposite, but even under its regime, the retail market became contestable.
If anyone would like to see the success of the retail market in its contestability, just bask in the warm glow of these fluorescent Chamber lights to realise the person or organisation retailing to the Legislative Assembly is not the Power and Water Corporation. It is QEnergy, a different retailer working in the niche market of tranche one customers, of which the Legislative Assembly is one. The sky is not falling in, and it is not falling in over there either. It appears the former government was prepared to accept the concept of retail contestability, because it allowed it to happen. Retail contestability was already there at the change of government, and continues to be there.
The Treasurer has identified other inefficiencies in the system and wants to address them. Benchmarks for future power increases in the Northern Territory have already been set. The Chief Minister reiterated again this morning that those benchmarks continue to exist, and that is the cost of power going forward. The cost per kilowatt hour of electricity in the Northern Territory is at about the national average …
Mr Tollner: It is a bit below
Mr ELFERINK: Okay, it is a bit below. We provide electricity in the Northern Territory to all customers, including those in the bush, at the same rate, which is almost the Australian average. All customers in the bush are currently enjoying power prices set by the government, and will continue to do so. Whilst it costs a bucket load more to provide electricity in the bush, customers there will pay no more than a customer in Malak, Palmerston or Nightcliff, because of the community service obligation, or CSO as it is known, which has been around since self-government as far as I am aware. The government …
Mr Tollner: It is the universal or uniform tariff.
Mr ELFERINK: Okay, it is the universal tariff; I thank the Treasurer for that. You have this benchmark, but it is the only one by which you can buy electricity in the Northern Territory. You cannot buy electricity at any other price than the benchmark set by government. That benchmark will not change, because we have already articulated what those costs will be into the future. We know what the cost will be, but what if there is a provider wanting to come into the marketplace because it reckons it can generate electricity for less than the Power and Water Corporation? Moreover, it can do it for less than the standard market rate.
To give comfort to any such organisation or player coming into the field, one of the things they will want to ensure is they are not competing with a provider which owns not only the competing generation, but also has possession, through a monopoly arrangement, of the network. Let me give you a parallel. The parallel I draw is with a railway. We have a railway in the Northern Territory, and the network is the steel ribbons which do not move anywhere, and exist between Darwin and Alice Springs. That is owned by a company. You then have a business wanting to take its rolling stock across that railway. If it is the same company which owns the rolling stock as owns the railway, any competitor would immediately be concerned that the moment it tried to get on to that railway with its own rolling stock, the owner of the competing railway would be able to transfer the cost of running the rolling stock to the cost of running the network or vice versa.
People would be very nervous operating in that environment because the cost of running the rolling stock could be manipulated by the owner of the railway. If, however, they were two separate businesses, one running the network and the other generation, you would be competing against another competitor on a level playing field which had its own rolling stock. You would then be buying space on the network, namely the railway, to use it from a different business, and there would be no crossover between your direct competitor and the competitor which owns the railway.
This parallel works with the generation of electricity. If the generator owns the network you cannot be entirely certain you are competing on an equal footing with another generator.
I understand Treasury has had difficulty determining which money goes where in relation to the Power and Water Corporation, and the arrangements between generation and network are not clearly defined. If, however, you structurally separate the two, you achieve one business running generation and another running the network. That will create an environment where, because tariffs are already known in advance, a competitor might feel comfortable coming into the Territory marketplace to say, ‘We can do it more cheaply’.
If that is true, and we believe that is the case, a competitor will come into the marketplace. Imagine a circumstance not entirely different to one I experienced in South Australia a couple of years ago when I was staying at my mother-in-law’s place for a night or two. There was a knock on the door, and the person at the door was representing an electrical generation company, selling its product; their big sales pitch was that the company could do it more cheaply than its competitors.
If we agree with members opposite and we resist this structural separation, we are depriving electricity consumers of the opportunity to possibly enjoy cheaper power. It is unlikely this cheaper offer would find its way into the bush. I would be surprised if there was a competitor, but who knows? There might be one, with new technologies, which could compete with the Power and Water Corporation and the CSO in the bush. The benchmark price in the bush will still be benchmarked against the rate set by the Northern Territory government. Having made that observation, there may well be, certainly in the larger centres, a capacity for other generators to come into the marketplace.
If we had multiple generators we could also have a fall-back position against failures in one particular system, because you would have a number of generation systems available to the marketplace. I also note that in 2011, an Ernst and Young study found that Victoria’s networks cost had decreased by 9% on a customer basis between 1996 and 2010. The Victorian network, as I understand it, runs separately from generation, and because of this costs had decreased. It had become 9% cheaper for the network to operate on a customer for customer basis. That would be an extremely attractive outcome for the average person paying electricity bills, particularly in an environment where many people choose to run their air conditioners as much as they do in the Northern Territory. This is about the potential for cheaper electricity.
The last time I stood in this place I said electricity prices will probably continue to go up, but structural separation would put downward pressure on prices. I must correct myself now, because not only does it put downward pressure on prices, it has the effect of making network supply cheaper. It costs less.
That is from Ernst and Young’s 2011 report on Victorian domestic electricity prices and its studies in those areas. It is an important component of this, and I am comfortable with suggestions by the Treasurer that this is a good idea.
Yes, I have a great belief in market competitiveness; that is part of my political philosophy, and I have a great belief that competitiveness will produce better prices from the retail sector and from the network and generation environments.
It would be far better to allow competition in this space, rather than continuing to underwrite a monopoly provider which has historically shown levels of inefficiency many people would find unacceptable.
Since economic reforms, Victoria’s electricity consumers have enjoyed the lowest prices of any state within the national electricity market, or NEM, and it is widely observed as being the most competitive market of its type in the world, with one in four households switching providers every year. That is because people are going into the marketplace and choosing who they buy their electricity from.
Mr Wood: Victoria has the fifth-highest electricity prices by country.
Mr ELFERINK: It is cheaper than us right now. I pick up on that interjection because it is a very valuable one; I thank the member for Nelson for it. Victoria does not charge as much as we do. What does that tell you about the problems we have in the Northern Territory, and the prices we are paying, which are only the national average? We have some of the most expensive electricity in the world; that is the assertion from the member for Nelson. I love it when he tries to interject to describe a point, but in the process exposes the depth of the problem we have.
I reckon the member for Nelson would be champing at the bit to support legislation allowing competition to enter the marketplace so we could have cheaper electricity.
Mr Wood: It already exists.
Mr ELFERINK: He will argue against – I suspect by the quality of these interjections – a competitive environment because he wants to keep a dead hand on the tiller of competition. He has bought into this fear that competition is somehow bad.
Mr Wood: I did not say that; you already have competition.
Madam SPEAKER: Order!
Mr Wood: Who owns this place? Who runs this?
Mr ELFERINK: You have made my point from earlier. Were you here before when I was talking? I talked about QEnergy.
Mr Wood: The Treasurer has not spoken about cheaper prices, you are the only one.
Madam SPEAKER: Order, member for Nelson!
Mr ELFERINK: I am talking about what has happened in Victoria, and there is a competitive environment there
Mr Wood: It is competitive, yes, but that does not mean it is cheaper.
Mr ELFERINK: This is the point. Ernst and Young has said it is cheaper.
Mr Wood: What is it cheaper than?
Mr ELFERINK: What it would otherwise cost to keep – speak your mind, you will get your chance. I am happy to entertain you, but for a bloke who constantly whinges about being interjected upon, you are having a bloody good day today, mate.
Mr Wood: I have only had five minutes.
Madam SPEAKER: Member for Port Darwin, withdraw that comment.
Mr ELFERINK: I withdraw, Madam Speaker. I am curious as to how the member for Nelson will argue this, because I am demonstrating, quite clearly, some of the reasons electricity might cost less. I suspect from the interjections that the member for Nelson will make one of his each way bet speeches shortly.
We will find ourselves in a competitive environment, and Labor stridently resists competition. That is its political pedigree. Members opposite would rather maintain an environment of expensive power prices so they can keep their hand on the tiller, expecting taxpayers to fund an organisation which has produced electricity in such a fashion as to require ongoing support from Territorians. If another punter in the marketplace says they can do it more cheaply and sell electricity into the marketplace, I would welcome that. It is worth pursuing an opportunity to do so through structural separation.
As I said, this is benchmarked at a certain level. We know what the price of electricity in the future will be in the Northern Territory because it has already been articulated. It will not be any more expensive than what has been said by government. If we create an environment where somebody can come into the environment and do it more cheaply, they will sell electricity into the marketplace more cheaply. That is not rocket science and is exactly what this government is arguing for. It is almost like members opposite do not want try it or look at it in case they are proven wrong.
As far as I am concerned, this is a positive step forward for the Northern Territory. A competitive marketplace will serve the interests of the people of the Northern Territory and produce cheaper electricity than it otherwise would have. If competitors cannot come into the marketplace and fill that gap, consumers will stick with the product they know from the Power and Water Corporation, and it will be at the price set by government.
I am not sure how people think they will lose, and still cannot imagine, in the face of that set price regime, how the member for Wanguri can maintain the position that electricity will somehow become more expensive.
I look forward to the debate continuing. We will have a similar debate several times today because we are dealing with each of these bills separately. You must be careful of scurrilous misrepresentations from members opposite, and you can already hear it from the member of Wanguri, who says this is being rushed through. It is not; it has gone through normal parliamentary processes, and whilst I understand some members of the PAC feel we should hold it over until it reports, this is one of the reasons I cautioned farming that to parliamentary committees. I would have to double check, but I am pretty sure I said in this House that if a committee chooses to do so, that is fine, but it does not mean the legislative program of government will slow down to accommodate committees. If committees are anxious to make reports, they should do so in a timely fashion.
I also note a number of other organisations, including the Energy Users Association of Australia, the Energy Networks Association and the Energy Supply Association of Australia all support what the Northern Territory government is doing on the grounds a more competitive and efficient energy sector is positive and good for the marketplace.
I will quote from an Energy Supply Association of Australia press release from 2 May 2014. It says:
I can go on quoting from this press release. Suffice to say the Energy Supply Association of Australia:
This is the sort of endorsement you hope for in these circumstances. The Energy Users Association of Australia makes similar observations and continues to support the Northern Territory government’s steps in this direction. The Energy Networks Association also throws its weight behind what the Northern Territory government is trying to do.
These organisations believe in the competitive environment because it produces better results. I take their, as well as Ernst and Young’s, word for it, and I believe a competitive environment is good for the consumer. I have seen no evidence that a competitive environment creates events such as power supply interruption any more than the government’s supplier. The Territory government, as a supplier, probably has one of the poorer records for (inaudible) events across the country. I support any environment which limits those events.
There is little downside and much to be gained for Northern Territory consumers. Whilst the Labor Party continues to create fear around this, I suspect you will find, especially for those who live in our larger consumptive bases, there will be a positive result in the cost of electricity in the Northern Territory.
Mr WOOD (Nelson): Madam Speaker, I thank the member for Port Darwin for his views on this matter. I had to laugh when he said he is worried that when members of the PAC raise a concern there is not enough time to debate this. If there was an honest approach to what we are doing today, the government would not have stalled this legislation before the Blain by-election; it would have been passed, but it was stalled for political reasons. It is disappointing the minister said that, because this government had the power to allow the PAC to look at this legislation long ago, but refused.
I tried to pass a private member’s motion asking the government to look at this. I looked at what the Tasmanian government did; its parliamentary accounts committee looked at the disaggregation of the Hydro-Electric Corporation and other related matters in 1998. That is a fair time ago, but the Tasmanian government realised it was a very important matter, put the resources into investigating it and a 116-page report was produced. The committee had about 20 meetings, operated for about five months and brought back a proper series of recommendations and findings. Many of the findings touch on the same issues we are dealing with today about the importance of disaggregation and whether it will improve things or not.
Tasmania had a government which realised it was a major change in policy and put the effort and time into involving the community and the parliament with it. That did not occur here. I thank the member for Port Darwin for supporting a motion allowing the PAC to self-refer this matter, which it did. It had one meeting with about eight people and was supposed to come up with some recommendations within a short time. That is not the way to look at something so important.
The member for Port Darwin said the member for Nelson will have two bob each way. There are sometimes third opinions in this House, and that does not mean you are having two bob each way; it means you might have some genuine concerns about what is proposed by the government. For instance, in all the debate on this matter not one member of the government has said there will be cheaper electricity prices. That has never, as far as I know, been part of this debate. If the member for Port Darwin could show me where anyone supporting this, even the Treasurer, has stated there will be cheaper prices – I do not know where we will find that statement. I will go through some of the statements which have been made, because that needs to happen to highlight some of the issues which concern me.
I am not against competition, but we already have it. It is not a new thing. Tasmania not only wanted to look at disaggregation, but also at allowing competition into the market. We already have competition, otherwise QEnergy would not be supplying power to Parliament House. What is wrong with the competition we have now? What is stalling other people? Is it the disaggregation of Power and Water or simply that the market is too small?
QEnergy and others are concerned Power and Water, in its present state, is not transparent and there are possibilities of cross-subsidisation. There is no proof, by the way, and that has been mentioned by a couple of people who have commented on this matter. They have said the present situation does not encourage competition, it does not make Power and Water work harder and that is one of the reasons for introducing these changes.
These are reasons for these changes given by the minister during his second reading speech; he said this will:
Will it supply competitive electricity services to average Territorians? We have already heard QEnergy is not interested in households. I have not heard of one company interested in being part of competition for Territory households. They are only interested in the big stuff because that is where they see their margin.
QEnergy is like a trading company which deals with finding the best price for, especially, small business and businesses in relation to the retail market. As was said during the Public Accounts Committee forum, they are not in the market for domestic suppliers.
It is claimed the present structure is not conducive to the efficient supply of electricity to the market. That has been said many times, but I would like the Treasurer to tell us where the inefficiencies are. If you say somebody is more efficient, you are making a presumption Power and Water is run inefficiently. If someone is telling me Power and Water is not running efficiently, would they kindly tell me where it is not efficient?
I have heard that word used many times by many people and not one has told me where it is inefficient. I presume, even though the member for Port Darwin was talking about networking – perhaps I have missed something in this debate, but I thought we were talking about generation. Networking was, to use a farming term, ring locked, and retail was the third division. They were to be broken up into separate companies. I presume we are saying one will stay as a monopoly and the other two will have competition.
There was a lot of discussion about networking, and I do not know if it is relevant to this debate. I am not saying it is not an important thing to talk about, but I am not sure that was part of the debate we were recently having.
One of the classics is - the Treasurer said it today using different words – this will bring Power and Water in line with electricity companies, public and private, in the rest of Australia. What about Western Australia? It had eight years of disaggregation and has decided to turn it around. We are also not connected to the grid, so are we trying to say that because some other place has it, it is suitable for the Northern Territory? A classic example is this government deciding it will have open speed limits, not allowed anywhere else in Australia; it says, ‘We have wide open roads which are suitable’. I could use the reverse argument and say, ‘Why do we say that because it was good in other parts of Australia it will be good here?’ It might be, but could someone explain to me why it would be? Could they give me some facts and figures and not make a grand statement? Anyone can say it has happened in the rest of Australia over the last 15-20 years, therefore it will be okay for us. I would like a bit more concrete information before I agree with you.
In his second reading speech, the minister said it:
I again ask the Treasurer to show us the inefficiencies. If you keep saying Power and Water is inefficient, or could be made more efficient, you are telling me it is an inefficient organisation. It has to be inefficient in a couple of ways, such as how it produces electricity. Where are the inefficiencies in generation and retail at present? It would be nice not only to say it will improve efficiency, but to tell us where existing inefficiencies are which could be improved.
The minister also said it is a:
Who is it competitive for? Perhaps it would be for big business, but not for householders.
NewCo said - this is where it differs from the member for Port Darwin - this will help the government to:
Can you show us how that will happen? Show us where these savings will be which will put a lid on power prices. It has not happened. NewCo also said this will:
It also mentions finances being ‘truly transparent’. Ken Clarke said, during the Public Accounts Committee hearing, they have nearly broken up the divisions, so you can see what they are from a financial point of view.
Benchmarking: A question was asked during the Public Accounts Committee hearing about being shown an equivalent system to Darwin’s, and there is not one. They were looking at Kalgoorlie, which is connected to the grid. It is difficult to benchmark when there is no one else in Australia to benchmark with. NewCo also says we will turn on the blowtorch on costs, which can only be done through competition. That is fine; I am not opposed to competition, but can someone tell me where the blowtorch will go and where costs can be cut? It is a statement. We have been around a long time, so someone must know how much it costs to run generation and where you would find competition. Treasury has said this will provide safe and reliable least cost electricity to Territorians. There is also a statement which says:
Ken Clarke said they are working to achieve financial transparency and have just about achieved it. The Treasury also said the boards of the GOC will exert:
What concerns me is supporters of this process are saying you will break it into three different companies. This will make it work better, they can concentrate, there will be three boards, three administrations and a fair bit of money will be spent, at least $6m or $7m. Can someone tell me if the Origin electricity company has broken itself into three different companies? It produces, undertakes exploration and sells power. I looked at Origin’s website, as far I could dig, and I found nothing to say it has been broken up.
We are saying to Power and Water, ‘You have to break yourself into three different companies and have three different boards’. Origin has one board to run quite a large company. It has 4.5 million customer accounts. That is a large number of people, but it has one board. Why should you have three boards if you are trying to run an electricity company?
The disadvantage of three boards is they do not start talking to one another, whereas with one board, the company knows how it is operating overall. All parts, such as retail and generation, talk to each other. They are not separate. One board is capable of running a company with 4.5 million customers. Why must we break ours into three? Are we not putting Power and Water at a disadvantage against other companies that come in, which have not had this similar break up?
QEnergy is holding discussions with Northern Power. I imagine they talk to each other but are separate companies in the first place. If Origin Energy comes here, will we ask it to cut into three individual companies? I do not think so. Some of this advice, thankfully, came from the Auditor-General, and it gave me some indication – I will read some of it because my argument is we do not need to break it into separate companies and can leave it as separate divisions, as Ken Clarke said they have nearly done already.
The argument against that is, as Ken Clarke said, back in the days of Paul Everingham or Shane Stone, the pendulum will switch back and we will lose control. Do not forget we still have competition. We are saying that to improve competition we need transparency in how Power and Water operates. This is what Frank McGuiness, the Auditor-General, wrote back to me:
The Auditor-General is saying it could be done with a ministerial direction. We could achieve what the government wants without spending a large amount of money and still have competition. This is not the same as the situation in Tasmania. It was dealing with disaggregation as well as the issue of bringing competition into the market. When I sum up, I will come back to whether we can do it within divisions using the advice from the Auditor-General, still have competition and do it in a way which will not cost us as much money.
The Treasury said industries will not come unless they have access to the most efficient electricity services. Why did ConocoPhillips turn up? I know it can produce its own power now, but it did not have that capability when it first arrived. I do not know whether INPEX is now producing its own power, but it still came. We have had some big companies come to the Northern Territory, they have negotiated an electricity price with Power and Water and been competitive. I do not accept this has necessarily stopped big companies coming.
Power and Water, in its statement about why this is a good thing, said it will provide greater transparency. Mr Clarke has said it has nearly achieved that transparent separation and it will increase efficiencies.
These are people who know about efficiencies, so they should be able to tell me where they will occur in Power and Water, but unfortunately that is one of the big things missing in this debate. Show me where efficiencies will come from. The Public Accounts Committee has discussed that. People might think I look at things a bit simply, but generation, for instance, which you would imagine is fairly straightforward, is a matter of buying some gas, putting it into a generator and electricity is produced.
I thought that would be fairly simple, but it is not. When he was talking about this at the hearing, Mr Tregilgas said he was not privy to the gas contract, but he did know Power and Water had not been taking all of the contracted amount of gas, so there was a penalty borne by taxpayers.
We have not had a chance to look at that issue, but it is a very important one which needs debating. We have only had one meeting to discuss this matter, and we now find out Power and Water has not been using all of its gas and has been penalised for it. It would be nice to go into that, see what the reasons were and how this fits with the mix of competition.
There are issues of wholesale and retail pricing. There is the issue of how much gas Power and Water has to spare, so if Northern Power comes into the market, can it buy excess gas from them? If they can buy gas more cheaply than Power and Water buys it from itself, why are our prices higher than what Northern Power is selling it for? They might sound like silly questions, for the experts, but for me that is an area here which has not been discussed.
The government is saying it will introduce efficiencies. How does this work in practice? We have not had enough of a chance to dig into this properly to find out if that will be the case. How will Northern Power work in the market? There are a number of concerns in that area as well. If Northern Power takes even a quarter of the power of Power and Water, what is the story with generators?
There is some discussion that some of those generators could depreciate and be mothballed. I will leave the accountants to work that out, but if you have paid $200m over the last few years for your generators and they have not reached the end of their life but are no good because someone else has come into the market — I know it is said that you can depreciate that figure, but you must have paid for those generators, and somewhere along the line that is part of the debt. Somehow that debt still has to be paid.
The other side of that is if Power and Water has fewer customers, that means less income and profit. The argument is that Power and Water will be able to run generation more efficiently. That may be the case, but no one has shown me how that can happen, especially if you still have to run generators at night, for instance.
I am disappointed there has not been adequate time for members of parliament, who are not all experts in electrical distribution, to go in to a lot more depth to see if it really is the case we can have improved efficiencies in the generation of power. It might be; I am not arguing that it could or could not, but we have not had the chance for a generation expert to show us if Power and Water loses the Army, Parliament House and something else to QEnergy, it will be able to make the same amount of money by becoming more efficient in production
There are people with more brains in this than me, but that is the way I see it. The problem I have in trying to support this motion is that we have not had a chance to see that what you are doing stands up to what you say it will do. I have tried to keep an open mind on this because I support competition, but I will not go down the path of changing Power and Water based on nice sounding things, or thinking that because someone else did it, it will work in the Northern Territory and make it more efficient. Where are the inefficiencies? I have not received any proof there are any and that concerns me.
Whether this is a road to privatisation is a difficult area. Many people say it is because the Treasurer stated privatisation would not be something he would deal with in the life of this parliament, hinting it might be something on the cards at the next election.
There is an area in this bill about changes to the corporate structure. I have heard people say not to worry about that; it is where you can transfer assets from one government owned corporation to another, to a subsidiary, a corporate or any other Territory body, and there have been concerns that, within some of those definitions, it could mean a private company. I am not a corporate lawyer; I have been trying to find some corporate lawyer-type definitions from Google and you must pay hundreds of dollars because they do not give them away for free. I did not get far trying to find out what some of the definitions meant, but, again, if we had a bit more time we could have some corporate people in to explain any loopholes in this legislation that would allow the government to sell this without coming back to parliament.
We go on what people say, and I am not saying they are not telling us the truth, but some of them are saying what they believe. Sometimes on these difficult areas it would be nice to get a second opinion.
It concerns me that it would be much harder to break up Power and Water for sale if it was left in its divisions where it had a clear ministerial direction that it must show those divisions – as mentioned in the Auditor-General’s letter to me – and it has shown them in years gone by.
I cannot see why that still could not occur along with competition. Instead of trialling disaggregation the same way as Western Australia, trial the breaking up of divisions according to the process the Auditor-General spoke about. Trial it for five years so divisions are transparent, as Mr Clarke said has nearly been achieved, and to stop it bouncing back into old habits. The minister can give Power and Water direction it must continue with that process.
To have three boards disadvantages Power and Water; what we are saying is, ‘You will act as a company and generate and sell electricity just like any other company, except you will be owned by the government’.
Why put more stringent controls on Power and Water which would not be applied to Origin Energy? Origin Energy has one board and they talk to one another. We have three boards and, according to the way it is here, they will all be fighting for the bit of their company to make sure it is going well and is competitive. You do not want over-competition within your own company; you would like to know what the left and right hand are doing. I looked at Ergon, the government owned company in Queensland, which has one board. I am a little confused as to why this model is the only model we must agree with.
I heard the minister speak today about how, for the last 15 or 20 years, other governments have brought in these reforms. He also quoted from a congratulations letter from all of the fellows there, giving them a pat on the back and saying how it is terrific this is being brought in after all this time. He has not told us why this would make a difference, and it is not the same as New South Wales, Victoria, Queensland, Tasmania and South Australia. We are an isolated area with 83 000 customers, and we have some special difficulties producing electricity in this part of the world.
Do not play me off as a dill, because I am taking this debate as seriously as I can. I am trying to save taxpayers some money, about $7m, by asking, ‘Can you achieve the process you want?’ You have competition, so let us not argue completion is not available to people who want to come to the Northern Territory. All you are arguing is that by splitting it up – everyone has argued this – it will become more efficient, but you have not showed me the inefficiencies. You said this will encourage a more competitive market; you are saying the market cannot see the transparency in Power and Water unless we break it into separate companies. Yet, the Auditor-General said we used to do it and Ken Clarke said we are doing it; we are that far away from ensuring those divisions comply with the complaints and concerns of QEnergy and your friends in Canberra who wrote the nice words …
Mr Tollner: COAG.
Mr WOOD: COAG, yes. COAG is not the end of the world, and you have stood on this side bagging it out when it did not suit you.
One good thing about living here for a while is you hear lots of stories on one side which are completely reversed on the other, but that is another matter.
Why will you not trial what the Auditor-General is saying can be, and was, done? The divisions are clear; you do not have any extra boards. I cannot see private companies taking on our version of running an electricity company through three boards. That is bureaucratic and inefficient – three boards, three administrations and three lots of computers
Mr McCARTHY: A point of order, Madam Speaker! Pursuant to Standing Order 77, I request an extension of time for the member.
Motion agreed to.
Mr WOOD: Thank you, member for Barkly, I will sum up quickly.
I am knocked, because people say I sit on the fence, but I do not. I will not support the disaggregation you are undertaking, because it is a waste of money. You can do it, as I said, by breaking up the divisions and ensuring, as Treasurer, you give a direction where those divisions must show their accountability and transparency. Stay with one board, otherwise you are uncompetitive with other companies. If we say we will be competitive in the open market, at least look like it. It should not look like something the open market would not take on.
I support competition but have not seen evidence of where inefficiencies are. I have not seen that breaking up divisions through an accounting process, meaning they do not need separate boards, will not achieve what you are trying to do. I am not against what you are trying to do, but it is a long-winded, costly and bureaucratic process to achieve something the Auditor-General says you can achieve now.
If you want to try something, bring in that model for five years and trial it. Western Australia trialled its disaggregation model for eight years and has now turned back on it. Let us try something Territory-style; do not waste money; it is only a small company with 83 000 customers. You should trial it instead of going through what I call a wasteful and inefficient process where we can achieve it by doing something in a different way.
I will not support the changes. I am not sure I agree with Labor about privatisation as I have no proof that what I see, even though NewCo said – the number in the section talking about the transfer of regulations probably included some luxurious things which did not need to be there, because the main key is the transfer of one GOC to another. I am not sure about that part of it.
Treasurer, this bill is important for the Territory and the many people concerned about it. They do not have the chance, like we do, to go through these things carefully. I am disappointed we have not spent the required time on this bill.
We were told during the sittings that the 1 July date is just a nice date and you want to introduce these changes on 1 January next year. It is a pity we could not have looked in depth at what this means. We could have gone interstate and talked to Origin Energy, Ergon or maybe some of the national electricity people. We could have asked their opinions, because I do not know. It would be nice to hear second opinions, because this is a difficult area. I do not want to see Power and Water go broke. I do not want to see the people of the Northern Territory paying higher tariffs because it is making less profit, or paying a bigger subsidy because tariffs are the same. Those questions need answering as well.
The Treasurer will say, ‘Well, that is the way it is and that is the way it is going to be’. I hope he gives serious consideration to holding off on this and perhaps allowing the Public Accounts Committee to investigate further. I know the chances of that are not great, but I would have loved to speak to these companies quoted as saying, ‘This has happened for 15 or 20 years out there’.
Let us go to Victoria and see whether that is the case. I do not know what the member for Port Darwin was laughing about, but I pulled out a document which is available on the web. It compares the cost of electricity in 91 countries, states and territories, and includes Victoria, and will explain people the comments I made when the member for Port Darwin was speaking.
This is a document called a ‘Report to the Energy Users of Australia’ from March 2012. It has a series of graphs in it called ‘country comparisons’. Figure 3 is a comparison of household electricity prices in 2011 for 91 countries, states and provinces. In the comparison it shows the ranking of each jurisdiction from highest to lowest prices; Australian states and territories are marked in red.
I will see if the summary is on the back and I will read from there. The highest household electricity prices by country in 2011 were: Denmark; Germany; South Australia; New South Wales; Victoria; and Western Australia; these are four states which have introduced the changes we have talked about as being beneficial. We then have Cyprus, Belgium, Japan, Norway, Tasmania, Sweden, Italy, Austria, Spain and Queensland. After those we have Malta, Ireland, the 27 EU countries, the Netherlands, the Northern Territory, Luxembourg, Switzerland, Slovakia, United Kingdom, Portugal, Hungary, New York and the Australian Capital Territory. Even New Zealand is cheaper than us, as is France, California and Estonia, which probably receives special gas prices from Russia. Mississippi is cheaper and at the bottom is Washington. We talk about the advantages of privatisation and what we are doing, but four of our states which have been in the business for a while are at the top of this list. If I am a bit concerned about statements made without proof, that is a classic example of where I am coming from.
I am sad the bill has not gone through the much more detailed and thorough process it deserves. There are many questions that need answering. I hope I have put a positive alternative to the minister; I am not here just to knock you. Taking this seriously, there is a cheaper alternative which is more sensible, and if you trialled it for five years – competition still exists, we have not gotten rid of it. You and companies want transparency to ensure Power and Water is doing the right thing. Do not turn it into a bureaucratic nightmare, with all of those boards and extra administration. Keep it simple, make it transparent and let us do something different and better for the Territory than what is proposed today.
Mrs LAMBLEY (Health): Madam Speaker, I support the Treasurer and Shareholding minister’s Power and Water Corporation Legislative Amendment Bill 2014 (Serial 63).
It is fascinating listening to this debate. We have been in government for around 18 months and the first thing we did was undertake a thorough and forensic analysis of the finances of the Northern Territory, similar to the National Commission of Audit report recently handed down by the federal government. This was undertaken by a group of gentlemen who have been referred to as the Renewal Management Board.
Ms Lawrie interjecting
Mrs LAMBLEY: The Leader of the Opposition can giggle, sneer and criticise the Renewal Management Board, but it effectively did what the National Commission of Audit commissioners has done for the federal government. It analysed our financial position.
After 11 years of Labor we invested a significant amount of money in employing a group of highly skilled and professional gentlemen, as they happened to be, to undertake a deep and thorough analysis of the mess left by the opposition. Those gentlemen are Alan Tregilgas, Ken Clarke, John Gardiner and Dr Neil Conn, who spent months looking under every stone, into every crevice and every corner of what had been left by Labor.
Ms Walker: What were they being paid? It was squillions.
Mrs LAMBLEY: They were paid exactly what they deserved. They are highly distinguished, professional people, and they found that through 11 years Labor it made literally no decisions, particularly when it came to the Power and Water Corporation. It left it in a diabolical state and failed to make decisions which could have saved the Territory a hell of a lot of money.
The Renewal Management Board spent probably over 50% of its time just looking at the Power and Water Corporation. From memory, it discovered that at the time of the change of government the Power and Water Corporation was contributing something like 40% to the debt of the Northern Territory.
The Independent member for Nelson asked where the inefficiencies are and why this is such a problem. The Renewal Management Board spent six months defining what the problems were. We have undertaken quite a bit of reform already, but at the time of the change of government the problems and inefficiencies existed from the top of the organisation right down to the bottom. That was documented to some extent in the first report delivered by the Renewal Management Board, and I am sure some of you in this Chamber have a copy of that. It defined, at that early point in time, that the Power and Water Corporation was the problem of this government. It was the main cause of our financial hardship, the fact we were facing an enormous escalating debt, as well as an unsustainable deficit.
We have been on this agenda of structural reform within the Power and Water Corporation from day one in August 2012. The member for Nelson is deluding himself by claiming it has come suddenly, without notice and sufficient time for him and others to preside, for even more time, over these structural changes and essential reforms. We have spent the last 18 months in this Chamber talking about the fact the Power and Water Corporation needs fixing. I do not think anyone in this Chamber could say that is not the case if they have been following the debate and reading the documents available to the public. We need to fix the problem; the Treasurer, the shareholding minister for the Power and Water Corporation, is getting on with the job and I applaud him for that.
Time is something we do not have. We had 11 years of Labor creating the problem. The former shareholding minister and Treasurer, now Leader of the Opposition, presided over a deteriorating corporation. She did not make decisions; she sat on her hands, despite the advice given to her by key players in the organisation.
We studied correspondence between the shareholding minister, the member for Karama, and the Power and Water Corporation board around the years 2010-11, and she was told she must do certain things to rescue Power and Water from falling into the pit it now has.
She could have saved the Power and Water Corporation from the serious financial state it is in, but did not. I do not think she knows how to make a good decision to save herself. When we started referring to the Leader of the Opposition, in the early days, as the worst Treasurer in the history of the Northern Territory, we were not joking. There is plenty of evidence to suggest that was the case.
The Leader of the Opposition had every opportunity to reform the Power and Water Corporation, to stop it from falling into a financial cesspit, and did not. She chose political expediency over doing the right thing and showing good fiscal management, and that is what we are talking about today. We are talking about making responsible decisions for the future of the Northern Territory, decisions Labor cannot make because it is all about pleasing people and keeping tariffs low. The former Treasurer was told, ‘You have to increase tariffs’. The Power and Water Corporation was commercially unsustainable, and to bring it up to any sort of parity, anything which looks close to coming in on budget, she had to increase tariffs, but she could not, because she was unable to make a responsible economic and financial decision. She was more worried about winning back her seat. That is politics; it is all about winning your seat back and keeping everyone happy. However, at some point you have to do the right thing, and Labor proved it was unable to do that.
There are many more examples of that outside Power and Water. Even in Health I have uncovered many things Labor sat on. It could not make a decision to save itself; it could not make the tough decisions.
On this side of the Chamber we feel we have a responsibility. We have been given this great honour, a four-year term to change things around, steer the boat in the right direction and fix the problems of Labor. Historically, that is what conservative government have always done. I know that, but we inevitably inherit fiscal basket cases …
Ms Walker: What about the black hole of 2001 Labor inherited from the CLP? Have you forgotten about that little …
Mrs LAMBLEY: … turn them around and then Labor comes in. That is the cycle of politics. I cannot hear what the member for Nhulunbuy is saying, but I have obviously pressed a button again.
The bottom line is we are intent on changing the culture of the Power and Water Corporation. We are about reforming the system so it is not such a burden on the people of the Northern Territory. It is difficult to understand, particularly when you sit in my electorate of Araluen, Malak, Gove or wherever you live, why increasing the cost of power and water in the Northern Territory is a good thing for everyone
If we do not act responsibility and try to make things more economically viable, it is a cost to Territorians through interest repayments we must make on our exorbitant debt inherited from Labor. We are, as the Treasurer has said time and time again, living beyond our means. Federally, we hear Joe Hockey tell us we are living beyond our means. The Power and Water Corporation is a classic example of how we are living beyond our means. We cannot afford to sit back and allow this corporation to fall further into this diabolical financial situation.
We have done our research and asked the Renewal Management Board to perform the preliminary investigation into what was happening in the Power and Water Corporation. As a result, we made some bold decisions which went down like a lead balloon; I am the first to admit. In the mini-budget in December 2012 we adjusted those tariffs. The former Treasurer, the member for Karama, was impotent and could not do it; it was beyond her. We did what was prudent and responsible by adjusting the tariffs. It was hard for all of us, but …
Mr Vatskalis: You then lost your job.
Mrs LAMBLEY: It was our job, that is right. We had to commence fixing the problems in the Power and Water Corporation. We took the advice of other people.
We commissioned a consultant, Marchment Hill, which told us how we must make other types of reform within the Power and Water Corporation. One thing spelt out to us very early in the piece was that the Power and Water Corporation cannot operate at a full commercial level. The problems were across the board and reforms had to be made. A comprehensive energy and water policy needed to be established. There were all sorts of recommendations at the time: the Power and Water Corporation board must implement appropriate and accurate financial management measures to address all identified deficiencies; pricing decisions are to be undertaken to start to bring the corporation into line; and the Power and Water Corporation is to be separated into different areas of functioning to change the culture of the organisation, eliminate financial confusion – which certainly existed when we inherited it – and to simplify the regulatory function.
The recommendations were not rocket science, even in the early days. It was about falling into line with what was happening interstate, and we have had some feedback, as mentioned this afternoon. We have had feedback from our counterparts in other jurisdictions to say, ‘Time is up, Northern Territory, get on board. You have to start reforming and separating the structures of Power and Water Corporation in line with the sentiment of COAG.’ We have had lots of feedback from the Treasurer as a result of the meeting he went to recently with his counterparts; he said that across the board there is great understanding the Power and Water Corporation cannot continue as it is.
The Power and Water Corporation is costing us a bomb as it functions at the moment. The arguments we hear from the member for Nelson and others across the Chamber that reform and restructure will cost a bomb and are not worth it, or there is no value in it, are nonsense. You must look at the bigger picture; if we undertake reforms now, separate it and make it more transparent to bring it in line with utilities across Australia, there are greater efficiencies to be made. You can argue whichever way you like, but that is the bottom line from all consultants we have employed, such as the Renewal Management Board. The Renewal Management Board consisted of people with a lifetime of experience in the utilities industry, and they said this is the way to go. It has happened elsewhere and this is what we need to do.
I fully support the Treasurer’s work in this area. It is very difficult, taking on not just resistance from the opposition and some Independents, but also a very big and powerful workforce. The ETU is also involved and it is very vocal, jumping up and down when it feels its turf is being changed in any way. I respect it for the role it plays in representing the interests of workers, but I cannot see there is any argument beyond reforming the Power and Water Corporation. From the expert advice we have received for a long time now, we are on the right track. It has been reaffirmed and endorsed by our counterparts across Australia. We need to get on with it, stop wasting money, make sure these efficiencies are brought in from the top to the bottom, and in the future we can hopefully enjoy a Power and Water Corporation and various entities which run far more efficiently than what was ever seen under the former government.
Ms LAWRIE (Opposition Leader): Mr Deputy Speaker, what an extraordinary contribution from the former CLP Treasurer, lacking in detail and any analysis or understanding of the objectives of her government in the separation. It is little wonder she walked out on budget Cabinet all that time ago, and the role of Treasurer, which saw a succession of Treasurers until we came to the member for Fong Lim, who brings his own style to the position.
The three bills before the Assembly will hurt Territory families and businesses, but the member for Fong Lim sits there chuckling. He has little care for the impact it will have on Territorians. The government says the split of Power and Water and the creation of GenCorp and RetailCorp will put a lid on power prices, as well as downward pressure on power costs. We know it will not; the inevitable consequences of this split will be increased power prices, reduced reliability of supply and, definitely, job losses. Job losses are somewhere in the vicinity of 400 to 600; it is still guess work, but that is the reality.
When people go to the polls in 2016, that is what they will have witnessed and you will be brought to account by Territorians for your actions. These are people whose livelihoods are in the Territory, who earn and raise their families here, and you will take an axe to their jobs. We know you are, and we know you have given that task to the three new boards of the Power and Water Corporation, GenCorp and RetailCorp. You are arrogant in your approach to that, Treasurer, but I also know a large number of people live and work across our Top End community. Those jobs exist in the Top End in large numbers and they sit in seats where your members are already exposed and vulnerable.
You are using your numbers to push through this split of Power and Water, not even waiting for the scrutiny of the Public Accounts Committee and the report of the inquiry it undertook. You are so arrogant in your actions and you will be held to account. You cannot be stopped here because of your numbers, but you will be held to account by the people who will lose their jobs, and they go to the hundreds. They are not going to pack up and leave the Territory. They are skilled in their capacity. They will be picked up and absorbed into industries feeding off the major project you will never speak of. You cannot abide the fact it was a Labor government which brought economic growth to the Northern Territory, figures which you love to chant. It is called Ichthys and the companies are INPEX and Total.
Here we are, with the split of Power and Water, and we know hundreds of Territorians will pay the price with their jobs. Families and businesses will pay the price in the inevitable tariff increases. When asked by the media some time ago, the Treasurer plucked out a figure of $2m as a guess of how much the Power and Water split would cost. Lo and behold, at the inquiry, with some questioning, it was discovered it is currently $7.8m. That does not include costs associated with the new billing systems which will occur, the new IT systems, and these are what I call year three costs. They are not countenanced in the questions and detail of the inquiry, but they exist and will have to happen. Your advisor, Mr Tregilgas, gave us a clear view in a briefing that the full and total separation of these corporations will have to occur, including billing systems and the like. That, as we know, is when all of these costs will happen. That is when your $50m-plus costs start to ratchet up, and someone will have to pay. It is Territorians who will bear the brunt of the decisions you are making, decisions based on support from a parliamentary wing which has not been given full access to the detailed information it requires to make a fully informed decision.
The parliament today has not had the opportunity to debate any reports from the Public Accounts Committee. You see fit to breach every parliamentary process and convention. When you have a parliamentary committee inquiry into an agenda like splitting up Power and Water, it is always the case, unequivocally, that the inquiry’s report is dealt with first so members of parliament not on the Public Accounts Committee can read and digest it before making a more informed decision. Not with this Treasurer and government; they are rushing ahead with splitting the legislation before the inquiry has been completed, before the report is delivered and before a more fulsome debate can occur.
It is little wonder members who have been in this parliament for a long time, like the member for Nelson, are in abject disgust at the processes which have failed to properly occur in the Chamber today. I share the deep concerns of the members for Wanguri and Casuarina, who have sat on the Public Accounts Committee inquiry and who, as we have seen through televised public hearings, have not received any evidence supporting the split.
When you sought evidence you were told, ‘Well, we have been looking at it for over 10 years and there is some information around that you would consider’. That is not evidence; those are weasel words. Evidence would be a cost-benefit analysis, but you would not want to do a cost-benefit analysis on this, would you? It would show you significant costs will be incurred by Territorians in the split of Power and Water, costs which have not been disclosed and were not disclosed at the Public Accounts Committee inquiry, to the eternal shame of the officials involved for not providing more fulsome responses about year three costs and beyond. When Labor is in government again, because we will work hard to capture the trust of Territorians at the next election, we will not let this go. We will inquire into the full costs of a split of Power and Water.
Territorians have every right to know the costs of the split of their public utility. The CLP did not go to the election seeking a mandate …
Mr ELFERINK: A point of order, Mr Deputy Speaker! I have just heard the Leader of the Opposition refer to the eternal shame of the officials involved, which amounts to another attack on public servants of the Northern Territory.
Madam Speaker has made it clear such comments should be restrained, and there should be an opportunity for public servants to go about their business without being attacked by the Leader of the Opposition for political reasons. She should withdraw those comments.
Ms Lawrie: They are not in breach of standing orders. I did not name people.
Mr ELFERINK: You are a grub of the lowest order; you do not restrain yourself at all. I cannot begin to imagine the people you are lining up and targeting for execution after the next election …
Members interjecting.
Mr DEPUTY SPEAKER: Can I have everyone seated, please?
Mr Vowles: You attacked the member for Nelson.
Mr DEPUTY SPEAKER: Member for Johnston, I asked for everyone to be seated. I would like you to leave the Chamber for one hour, pursuant to Standing Order 240A.
Mr DEPUTY SPEAKER: Leader of the Opposition, in future please be careful with your words.
Ms LAWRIE: I believe it is beholden on people to be fulsome with information provided to the Northern Territory. That is why I am deeply concerned no cost-benefit analysis has been provided by the CLP to support, in any way, shape or form, the decision to split Power and Water. The full cost will one day be known.
Fortunately, we still have, though God knows for how long under the CLP, scrutiny provisions of Power and Water. We expect to have, until sold, scrutiny provisions of GenCorp and RetailCorp, and we will be seeking, year after year, the full costs of the split of Power and Water. The truth will out. The architects of this burden on Territorians will be identified: the Treasurer, the architect; his sidekick, the Chief Minister; and their supporters. I find it amazing the former Treasurer quotes the Renewal Management Board, whose members we refer to as the ‘million dollar mates', who provided an interim report which no one with any genuine economic credibility could recognise as a thorough, analytical piece of economics. In fact, people from universities around Australia could not believe people put their names to it.
The former Treasurer, now Health minister, likened it to the Commission of Audit undertaken for the federal government. The Minister for Health likened that vicious blueprint attacking the fundamentals of Australian society to the Renewal Management Board’s interim report.
At least the federal government provided a full copy of that report into the public domain and allowed its author to be questioned. That is not like the CLP; it could not go that far. The interim report was four flimsy pages, not the full one. We are still waiting for a final report. At estimates last year we were told by the Chief Minister that the final report went to Cabinet and he would consider whether or not it would be released. Today there is still no final report from the Renewal Management Board. Is it that bad? Are you that ashamed of it? Does it really exist? These are questions we still have in opposition because unlike the federal government, which was prepared to stump up its Commission of Audit for full scrutiny and put it on the public record, that has not happened under the CLP.
We heard the predictable attack on me by the former Treasurer, now Minister for Health, who said I did nothing with Power and Water. It flies in the face of fact, ignores the financial review undertaken by Andrew Reeves at my instruction as Treasurer and ignores the fact that for the first time in 20 years, under me, significant tariff adjustments occurred, with 23% on power and 30% and 40% on water and sewerage in total.
As Treasurer I made the most significant tariff adjustments in 20 years. The CLP had stripped more out of Power and Water in dividends than it had put in, and the Labor government, from 2001 onwards, inherited a stripped down, run down Power and Water Authority requiring significant improvements across water, sewerage and power, specifically in networks and generation. It was clear we had to embark on a $1.5bn investment through capital, and repairs and maintenance, as a result of the catastrophic failure of the Casuarina Zone Substation, and a report undertaken by Merv Davies. This blame game ought to have stopped
a while ago, but that is all the CLP has to rely on for its mantra and rhetoric.
Power and Water was run down through the 1990s, having been built up by the CLP during the 1980s, hitting critical failure point in the mid-2000s. This prompted a necessary 20-year injection of capital, and repairs and maintenance, to rebuild infrastructure, including networks, at a time when the Northern Territory was going through dramatic population growth in the Top End, particularly in the Palmerston region, hence the requirements for new zone substations at Archer, at Lee Point and the complete replacement of the Snell Street zone substation. There was also the work done on the City Zone Substation, Casuarina and the list goes on.
Sadly for Territorians, the CLP stopped that massive program of maintenance at zone substations, hence Hudson Creek has significant points of failure, which we experienced with the catastrophic 12-hour blackout. That is the situation you reach when you stop a necessary rebuilding program which was under way as a result of Merv Davies’ advice.
What do we have? When the CLP came to power it produced a ‘million dollar mates’ quickie report to tell it what it wanted to hear: ratchet up Power and Water tariffs. When we sought advice from Mr Tregilgas at a briefing about what evidence, information and analysis that 30% power tariff increase was based on – when the former member for Blain was Chief Minister – he advised there was not sufficient data and information available, so they took a guesstimate at what interstate tariff increases had been.
I wrote very clear notes at that meeting. Mr Tregilgas, if that recollection is wrong I am more than happy to enter into correspondence with you, but we received advice that a 30% increase in power tariffs was a guesstimate based on what they had seen as average interstate tariff movements, not on any expert evidence and analysis. We were told the view was that there was not sufficient data available within Power and Water to achieve that level of analysis.
I queried that, given that Andrew Reeves, the former Utilities Commissioner who undertook the financial analysis of Power and Water, provided a fulsome report to our government justifying tariff increases that occurred in 2009. These were two very different approaches by two governments, one based on analysis by the Utilities Commissioner, the latter by the CLP on a guesstimate of tariff increases interstate. What has that meant? Families are now paying about $2000 a year more for their power bills. To families in the real world that means they are starting to hit the wall with their cost of living.
Affordability has been stripped out of the family budget and people are suffering. People are literally turning off everything they can, but when you have babies and little children and there is very hot weather, air conditioning is not a luxury, it is a necessity. For families who have sick children and require a more stable living environment, air conditioning and attendant medical support equipment is not a luxury, it is essential.
None of this has been taken into account by the CLP government in its headlong pursuit to split Power and Water, and its desire not to be acquainted with the impact which will flow through to Territorians. If you did not know, plausible deniability exists, and when it starts to come home to roost you can say, ‘Well, we were not given that information then’.
The introduction of these bills in February saw many attempts to have them referred to the Public Accounts Committee, and it was ultimately the persistence of my colleagues, the members for Wanguri and Nightcliff, joined by the member for Nelson, which saw them sent to the Public Accounts Committee for scrutiny. At the time the government had lost majority numbers in the Chamber and was starting to look like it might need a minority government agreement with the member for Nelson. It was because of that this was brought before the Public Accounts Committee as well. However, as we have seen today, the inquiry was not welcomed by the government. It allowed only one day for an inquiry of such magnitude. That is unheard of in the Territory. Inquiries of that sheer size and nature last several days over several weeks.
The action of the government to proceed with this debate before inquiry information is even delivered to parliament speaks volumes.
When questioned at PAC hearings, key witnesses from government agencies confirmed, as I said, that no cost-benefit analysis has been created for the split. That is extraordinary and unheard of. In its submission to the inquiry, NTCOSS said:
Let us put that in context; Western Australia has struggled with the economies of scale issue and is now trying to remerge its generation and retail. It is called a gentailer; it has not worked.
There are many examples of failures occurring due to the lack of economies of scale and we are right there in that picture. Yes, it will help someone who buys generation to make a motza. Territorians will bear the burden of that windfall to that commercial operator.
As I mentioned in Question Time this morning the Utilities Commissioner has also expressed concern about increased costs arising from the loss of economies of scale and scope in a small market like the Territory.
The Treasurer could defer these bills and undertake the analysis recommended by NTCOSS, part of a wider cost-benefit analysis. However, he will not do that.
In a submission to the inquiry, the Electrical Trades Union, among other concerns, drew the PAC’s attention to the absence of a cost-benefit analysis or evidence-based approach to the split. Its submission states:
One of the things we find most galling is the charade by the Treasurer that this will somehow put downward pressure on tariffs, when evidence in every other jurisdiction in Australia and overseas shows the exact opposite. Tariffs have increased. How dare he continue to be so deceitful to Territorians, but that is his form.
In addition to submissions from the non-government sector, there was widespread incredulity in the NT public service and the Power and Water Corporation that the substantial policy and fiscal agenda inherent in these bills has not been subject to a rigorous cost-benefit analysis. Treasurer, how much will power bills go up for small businesses like coffee shops, restaurants, motor vehicle workshops and retailers when the full cost of splitting up Power and Water is passed on to consumers? There is no answer. You do not want that answer and you do not want to be that honest with Territorians.
Other aspects of this bill have been brought into sharp focus by the PAC inquiry. Eight months ago the Treasurer confirmed the government had commenced discussions with private sector entities about entering the Territory’s electricity market when Power and Water is split up, but in usual CLP style he declined to say who he had been speaking to. When questioned about this during the inquiry’s hearings, the Executive Director of NewCo in the Chief Minister’s Department said:
What does this mean? The short answer is that while the Treasurer is pursuing an agenda to sell Power and Water assets, discussions have been going on behind closed doors with private sector interests. Territorians are being kept in the dark about what is on the table and what deals will be done.
Both Treasury and the Power and Water Corporation also confirmed that discussions had taken place with private interests, but the details cannot be disclosed because the substance of discussions is commercially confidential. However, in response to a question from the member for Nelson on the issue of profits when the new GOCs commence operation, the Executive Director of NewCo was more forthcoming. He stated:
The impact of the Power and Water split will not be limited to the Territory’s cities, major towns and regional centres. Under current arrangements, about $70m per annum is provided by the Department of Community Services for Indigenous Essential Services across 72 communities and 66 outstations. This is supplemented by $40m in direct revenue from prepaid meter tokens, charges to non-residential customers and Commonwealth funding. But when the profitable components of Power and Water are hived off, when we lose generation and retail, Indigenous Essential Services will be sitting in the residual GOC. How does it expand? Where does new investment come from when it has lost its revenue makers?
I am sure members whose electorates cover the relevant communities and outstations will be concerned about what this means for the Indigenous Essential Services program when Power and Water is split up, and when, ultimately, assets are sold. The Treasurer must undertake to ensure adequate funding is available to deliver viable essential services to remote communities and outstations. He needs to make an unequivocal guarantee to this Assembly to do so.
Another relevant development since the bills were introduced is the Utilities Commission’s final determination on network charges. The UC has identified a revenue requirement of $1bn over five years, including a 32% increase in 2014-15. The Treasurer needs to explain whether these charges will be passed on to GenCorp and RetailCorp, and how much will be recovered in dollar terms from Territory businesses and families. There are other significant concerns with these bills. Proposed new section 53A of the Government Owned Corporations Act enables the Treasurer to dispose of Power and Water Corporation assets by regulation, but draft regulations have not been provided to be considered in conjunction with the bills to split up Power and Water. The Treasurer’s unfettered power to transfer GOC assets by subordinate legislation is a blank cheque.
As pointed out by the member for Wanguri, the proposed amendment to the GOC Act permits the shareholding minister, the Treasurer, to issue regulations which could have retrospective application and direct a GOC to do something which would otherwise be unlawful. How extraordinary! These provisions will be of great concern to ordinary Territorians because they form part of the CLP agenda to privatise Power and Water by stealth. Of course you will not be selling the Power and Water Corporation, you will have the new Generation and Retail Corporations for sale. A striking feature of the Public Accounts Committee inquiry into the split of Power and Water was evidence confirming enabling legislation before the Assembly today was outsourced to private sector legal firms, presumably with relevant experience in other jurisdictions.
Given an asset sale agenda is at the heart of utility restructures around Australia, the use of external consultants with relevant legal energy experience does not come as a surprise, although the Treasurer persistently states the split up legislation only permits a transfer of assets between GOCs. Evidence from the Department of Chief Minister and Treasury witnesses to the PAC confirms the bills have a wider scope.
Agencies asserted that the intention of the bill is to allow the transfer of assets to and from GOCs. However, there was no doubt uncertainty about the full scope and intention of proposed section 53A, and whether the term ‘relevant entity’ will facilitate the transfer of Power and Water Corporation, GenCorp and RetailCorp assets to a private entity. When asked why it was necessary to have broader definitions of entities beyond a government owned corporation, the Executive Director of NewCo said:
Why then does it exist? When Treasury was asked why it was necessary to go beyond the definition of government owned corporation when defining a relevant entity, the Deputy Under Treasurer said some of this legislation is:
Mr McCARTHY: A point of order, Mr Deputy Speaker! Pursuant to Standing Order 77, I request an extension of time for the member.
Motion agreed to.
Ms LAWRIE: These are frank and alarming admissions which contradict the Treasurer’s mantra that he is not interested in selling Power and Water assets.
There are other issues in relation to the split of Power and Water which the Treasurer needs to answer. Evidence provided to the Public Accounts Committee confirms discussions have been held with Northern Power concerning its plans to generate 60 megawatts into the Territory market from a new plant located in Weddell. The Utilities Commission, in its 2013 Power System Review report said:
Does the Treasurer agree that any loss of generation market by Power and Water or the generation GOC during the next five years would result in stranded assets and a write off in asset values? If the loss is 60 MW this could be as high as $120m.
Higher costs of the GOC – because of the take or pay obligation under the gas contract it would be using significantly less gas but still have a minimum take or pay obligation, and the inability to run plant at optimal efficiency levels which increases your repairs and maintenance costs. I ask the Treasurer to confirm whether these significant costs have been quantified and considered by government. If so, will the Treasurer provide the relevant details to the Assembly during the course of this debate?
Before I finish I want to make some observations about the emasculation of Power and Water and its staff, and the absurd deadline of 1 July to achieve the split. Since he first announced the split of the Power and Water Corporation, the Treasurer, the member for Fong Lim, has been attacking the corporation and its staff with vile descriptions; ‘bloated’ is one of his favourites. Professionally and widely respected employees have been sacked, as well as competent and experienced board members; competent interim board members walked away in disgust, and the Treasurer is now demanding a sweeping program of structural, legal, administrative and organisational change be undertaken within the next eight weeks.
This is on top of plans for Power and Water to enter the National Energy Market, and to implement the Utilities Commission’s recommendations arising from the major blackout on 12 March this year. The split of Power and Water is ill-conceived and rushed, and the core functions of the corporation will be compromised if they are to meet the 1 July deadline.
We know a cost benefit or risk analysis on the split of Power and Water has not been undertaken. We know that secret discussions have been held with private sector electricity interests behind closed doors.
We know the bills provide for the transfer and sale of Power and Water assets by regulation. By the stroke of the Treasurer’s pen, privatisation can occur.
We know the Chief Minister and Treasurer have backflipped on their commitment not to privatise or sell Power and Water without a mandate from Territorians at a general election. They are not ruling out selling public assets, and we know, sadly, the CLP cannot be trusted with the Territory’s public assets.
We do not support these bills that will allow the privatisation of our assets with a cost impost on every Territorian, including a significant reduction in reliability, when this government has no mandate to do this. It has not taken it to Territorians to seek their views and their permission, and this government has done everything it can to hide appropriate scrutiny of this in any meaningful way.
I have seen some bad decisions taken in the past by CLP governments. I have never seen anything as disgraceful as this.
Mr VATSKALIS (Casuarina): Mr Deputy Speaker, I listened to the debate from both sides; I was also on the Public Accounts Committee where we interrogated a number of government officials from the public service and Power and Water, and I listened with great interest to what they had to say.
Looking at the legislation, you might think it is an attempt to make the Power and Water Corporation more efficient, and that is the argument the government has brought before the House. The Treasurer’s mantra is that Power and Water is not efficient, there is no transparent financial accountability, somehow it is overloaded with staffers and something needs to be done to provide the opportunity for lower power prices for Territory consumers.
The Treasurer also said there has been a change in the power and energy market environment in Australia which started 20 years ago, and asked where Labor has been all this time and why it is resisting competition. Let us make some things clear. It was a Labor government in Western Australia which split its power and water provider to include competition. It was a Labor government in Canberra which sold the Commonwealth Bank to bring competition, so the mantra that only conservative governments bring competition to Australia is false.
We also hear about competition. Hold on a minute, I have been in the Territory for 22 years and I have a long memory; I came here when the CLP was in power, as it was for 27 years, and it was at that time reform started in Australia. I cannot remember any CLP government coming to parliament and introducing any legislation with regard to Power and Water to increase competition and bring down prices. On the contrary, it was a CLP government which did everything possible to stop any other companies entering the Territory market to sell energy because it did not want competition.
That company was Paul Everingham’s; he had a generator at Mount Todd and asked for access to the cables and wires of Power and Water to sell electricity. It refused to provide access to the network, and as a result he took us to court. In 2005, the Labor government was forced to pay $60m compensation to Paul Everingham because the CLP government stopped him accessing our network.
With regard to the member for Araluen’s comments, there was competition in Alice Springs. There was a power generation facility in the Brewer Estate which the CLP had engaged at an extraordinary price, and a colonial contract we could not break until it finished. It would have been too expensive. That company was selling power to the Power and Water Corporation at a very high price, take or pay. It is extraordinary the CLP government would advocate for competition and accuse us of causing strife in it.
Why did Power and Water fall into so much strife? Let us look back. Power and Water was established by the then CLP government; it amalgamated sewerage, water and power, and created utilities. Unfortunately, before 2001, the CLP government of the time embarked on a big effort to reduce staff in Power and Water, cutting maintenance workers and not taking on apprentices. It did not put any money into Power and Water. Instead, it bought a private power line between Darwin and Katherine, and spent significantly more than what should have been spent. That became public through government officials, who disclosed the then government paid nearly twice the price of what we should have paid to buy the power line. I do not know why. Nobody was able to explain why that government bought the Darwin to Katherine power line.
As a result, the infrastructure of Power and Water was deteriorating. Power and Water did not have the people and capacity to maintain infrastructure, and that culminated with explosions at the Casuarina substation. At that crucial moment, it was Labor which had to borrow money, upgrade facilities, the network and the generator capacity so Darwin and the suburbs could have uninterrupted power.
Yes, money was spent and borrowed. At the same time, it was the Labor government which started increases in power generation. I used to pay 15 per kWh. That went to 19, then 22 and in the last days of the Labor government it went up to 25 per kWh. If anybody here tells you Labor did not increase the tariffs, they are either lying intentionally or trying to pull the wool over your eyes. I challenge you to go back, if you can, to some old accounts and look at what you were paying in 2001, 2005 and 2012. Do not take my word for it. Look at your old bills and you will find Labor was the first government for a significant time to increase tariffs.
I have no problem with competition. During the Public Accounts Committee hearing, I said publicly that if you show me it will increase competition, make Power and Water more efficient and reduce prices, I will happily support it.
We have a government organisation which we are told is not efficient. At the same time you tell me the private sector is more efficient and can deliver a better service for a cheaper price. Have you tried to copy the practices and methods of the private sector to try to make a public organisation more efficient? The answer is no. Nobody has yet tried to do anything to improve the Power and Water situation.
In 2001, the CLP government changed Power and Water from a public service organisation to a government owned corporation. I recall that very well because I was the minister at the time we introduced the bill in the House. Why did we introduce it? We were trying to improve the efficiency of Power and Water. As far as back as 2001, there was a need to make it more financially transparent. Here we are 10 years later, and the CLP is using exactly the same excuse to move from corporatisation to splitting up Power and Water. It tells us this is not a progression towards privatisation; the problem is that every other state which has privatised its public utility followed exactly the same path, splitting a public corporation and making it easier to sell because you have power generation, transmission and retail.
Not many people like to buy transmission because it is capital intensive. You have to repair, replace or expand it every so many years. However, people are quite happy to buy generation capacity, bring new generation capacity and then try to sell power retail. It is most likely the state will keep transmission, and the network and everything else will go. It is funny why it was split like that. Even QEnergy could not understand why we would split Power and Water into three areas. It said if it was them it would only split it into two areas. The government tells us that by splitting it, it will be more efficient, yet the private sector is telling us that is wrong and it is better to split into two entities rather than three entities. Who do I believe?
I am told splitting an organisation into three pieces will make it more efficient. Where is your cost-benefit analysis? Treasury could not provide one, Power and Water could not provide one. If any private business wanted to do something like that, the first thing it would do is engage a consultant to see what it would be get out of it. A business would ask, ‘Will it be cost efficient for us? Will it make us any profit? Will it make things better?’
This is a public asset. You are proposing to split it. You have given us reasons why but you cannot give us a cost-benefit analysis. How can I believe you? ‘Trust me, I am a politician?’ I suggest you do not use that one, because a few tomatoes will come your way. People do not believe politicians when they say, ‘Trust me, I am a politician, have I got a deal for you’. Forget it.
Have you done a risk analysis? What will happen to remaining assets if the public sector comes in, cherry picks the best clients, and you are left with assets which do not make money or lose it? We asked the Chair of the board and he said, ‘No, no, we have not done that’. We asked Treasury and it said ‘No we have not done that’. How can I believe what you are saying to us stacks up?
The Territory is not Victoria or New South Wales. It is not an interconnected network with power generation facilities. We have two or three generation facilities in Darwin as well as a network; we have a power line from here to Katherine and a power generation facility in Katherine and that is it. The next one is a small generator in Tennant Creek, and there is one generator in Alice Springs. In Jabiru, ERA generates electricity, and, through the Power and Water network, provides it to consumers. In Gove it is Rio Tinto which generates electricity and distributes it to consumers.
We already have two private generators in the Territory, but neither has said they can do things better, take over the network and charge a cheaper price to consumers. No, they generate electricity, sell it to Power and Water and it networks it for them.
You then have all of the small places like Papunya, Beswick, Palumpa, and Port Keats. They have their own generators, which use diesel. If I pay 29 per kWh in Darwin, do you know how much it costs to generate electricity in Papunya? It is most likely about two or three times the price. We have Power and Water as a generator which produces electricity and guarantees everybody in the Territory will pay the same price. Why? Because not many people in Papunya could afford to pay 75, 50 or even 40 per kWh. What they pay is subsidised by everybody else.
If private enterprise comes to the Territory to increase competition – we have heard from QEnergy that the first thing it will do is go for the big consumers, those who consume a lot of electricity – it will take those big consumers and Power and Water will immediately lose a big chunk of its clientele, the ones which use a lot of energy and pay a lot of money.
How will it work now? Who will provide subsidies to people in remote communities? If the government will pay for it, where will it find the money? It must come from somewhere. The federal government will not always provide money, it must come from within the Territory. That means either our power prices will go up or what we pay for our services will. People in Papunya, Beswick or on the Tiwi Islands cannot be penalised, paying 50 per kWh for electricity. They must be at the same level, otherwise they will not stay there. They will go away, revolt and not vote for the government next time.
As the member for Araluen said, this is politics. It is politics 101; you do not penalise people who vote for you because they will not vote for you again. It is as simple as that.
The PAC met again today and spoke about the report and this is another aspect which concerns me. The government conceded the legislation could be investigated by the Public Accounts Committee. Why? There was a very good reason called the Blain by-election. The government did not want to go to parliament with legislation which people – everybody knows it is a precursor to privatisation. The government gave the legislation to the PAC for it to investigate, hoping it would win the Blain by-election by the time the committee had finished its work – yes, you won – before bringing the bills back to parliament.
However, you were not smart enough to play the politics right. There was a motion to debate the Public Accounts Committee’s findings before the legislation was debated. You did not want that; the job is done and you want the legislation passed. We now have legislation which will pass through parliament because you have the numbers, and tomorrow or another day there will be two reports from the Public Accounts Committee. One will support the government and the other will say, ‘No, we do not believe what you say is right and these are the reasons we do not believe it is right’. You have already made up your mind. You will pass the legislation even if we do not like it, and forget about the Public Accounts Committee. That is a good political game to get it out of the way so we do not have to worry about it.
The other thing that worries me is I do not believe the Treasurer when he says it is not about privatisation. You have brought legislation to split a government owned corporation into three; in other states that is exactly what happened before privatisation. Even if I wanted to believe you are doing it for other reasons, like increasing efficiency, keeping prices down and allowing competition, how can I believe you when only a few days ago your Chief Minister went to a COAG meeting in Canberra and signed up to privatise Territory assets?
Who has the numbers? Who is stronger? Is it the Chief Minister, who signed the agreement at the COAG meeting to privatise public assets in the Territory, or you, who has brought this legislation and said, ‘No, this is not about privatisation, it is only about making things more efficient’? I think the Chief Minister has the numbers and the power, and he will privatise it because that is the agenda of the Territory and federal governments. That was revealed very clearly when we asked Ken Clarke, the head of the Power and Water board, if any work such as a cost-benefit analysis had been done to find out if this is a good idea. He said, ‘Yes, we have done it’, but then turned to an official, who said they had not. Mr Clarke said, ‘No, we have not done any’, and I replied, ‘Hold on a minute, you are going to split up a corporation worth millions of dollars and you have not done an analysis?’ Mr Clarke said, ‘We could not do it because that was a policy decision of the government’.
It had nothing to do with efficiencies, transparency or anything you have been telling us. Mr Clarke told us the truth that it is an ideologically driven piece of legislation.
Member for Blain, you are new to this parliament, and you know we play politics; we talk about it, but this is an eye opener. I am talking as a member of the opposition, but I am also talking as a Territory citizen, a person who will receive, in the next three months, a blue bill to tell me I am paying so much, and in a year’s time when Power and Water is privatised, I will receive another blue bill which will probably show me a significant increase. I cannot do anything else because I am stuck with the Power and Water Corporation and private operators are, as stated, not interested in the small customers, only the big consumers.
This legislation, even if I thought it was good, has unfortunately been overtaken by events. It has been overtaken by the Chief Minister’s decision to sign a COAG agreement to say he will sell public assets. This time we are talking about splitting the Power and Water Corporation, and this is a precursor to sell it. What will it be tomorrow? Will it be TIO? Will it be the Darwin Port Corporation? These are public assets. They are not owned by David Tollner or Kon Vatskalis, they are owned by the people of the Northern Territory, wherever they live and whoever they are. It would be a courtesy to ask those people if they want their assets to be privatised and sold. This has not happened, but it should have before coming to us with this kind of legislation to prepare the ground for privatising Power and Water Corporation.
I do not support it because irrespective of what the purists and economists say, the work has not been done to satisfy me the reason the government has given is true.
Ms LEE (Arnhem): Mr Deputy Speaker, I bring to the parliament’s attention that the split of the Power and Water Corporation is a major policy decision which will greatly impact on the people of my electorate. Communities in my electorate are entitled to know about the full implications of the government’s decision to split the Power and Water Corporation.
There are serious implications which go beyond what the government has stated about its decision to split the Power and Water Corporation. Its impact upon remote communities, with regard to power, water and sewerage, will leave lasting negative financial impacts which will flow directly on to Northern Territory taxpayers.
Assurances given by the Treasurer are not clear, nor do they appear to be honest. I understand a thorough analysis of cost benefit and risk associated with policy changes is a basic requirement of any reform or good governance. It is my understanding the PAC has not been provided with a detailed cost analysis of this proposed reform.
Through Public Accounts Committee hearings, it has become clear the government’s Power and Water reform package is not supported by any evidence to show it would be a positive move on behalf of my constituents, nor would it be financially viable.
Three bills have been introduced to split the Power and Water Corporation. These are: the Power Generation Corporation Bill, which generates income; the Power Retail Corporation Bill, where competitiveness comes in; and the Power and Water Corporation Legislation Amendment Bill. Number three affects my constituents, has serious implications for people in the communities and is where off-grid issues come into play.
I heard the Treasurer say this will not affect anybody in the remote communities, but the legislation amendment bill will.
It is not clear whether this is the correct way to go. In fact, during the Public Accounts Committee hearing, concerns were raised about proper processes being followed in regard to these proposed changes. In other words, the cost-benefit analysis is seriously flawed. Remote parts of the Northern Territory, including my electorate of Arnhem and all other Indigenous communities, will be worse off than under current arrangements.
Off-grid sewerage systems out there are almost 100 years old, and there have not been any upgrades. What will Power and Water do to upgrade what is already in place? If you go to remote rural areas around Darwin, it costs $800 to clean up one septic tank. In a remote community, with many houses, how much will a cleanup cost?
In Barunga we have septic tanks. Trucks come twice a year to clean up, especially during the festival; there is a lot of rubbish to be taken out of the septic tanks. I have grown up with septic tanks overfilling every year during the Wet Season, and it is still a problem in remote communities. How will the government take care of this problem? It has been raised over and over again; you are well aware of the problem at Weemol and Bulman, and we continue to bring it to the floor of the House. I raised the problem when I was on that side of the House and I am now raising it again. It has been a concern of all governments, and no one has listened to people in the bush.
Funding shortfalls, we understand, are up to $6m. That is required to top up the current Power and Water Corporation budget deficit.
Off-grid power generation, water and sewerage services are a major concern to all. None of the key agencies involved in developing and implementing the government’s plan to split up the Power and Water Corporation have detailed a cost-benefit analysis on the government’s proposal, nor do they show any major benefits which will result from structural separation. If the government wants to go ahead with the structural separation of the Power and Water Corporation, it will need to convince the people of my electorate and the Northern Territory there is merit to it, as well as cost benefits, and that the impact on future electricity, water and sewerage services will not be financially detrimental. Thank you.
Mr McCARTHY (Barkly): Madam Speaker, I oppose this legislation which lacks an evidence base and research approach.
The case for splitting the Power and Water Corporation has not been made by the Treasurer or the Chief Minister. No cost-benefit analysis has been carried out, and there is a big agenda in preparing parts of the Power and Water Corporation for sale to the highest bidder.
The case for such a shake-up in our most important utility cannot be put with rhetoric. It is not good enough for the CLP to say this must happen because it thinks it is a good idea. The case for splitting Power and Water can only be made when eminent experts in the industry produce a transparent cost-benefit analysis which makes it clear the benefits outweigh the costs. Will electricity supply be more robust and reliable? We do not know.
Will the Power and Water Corporation run more efficiently? We do not know. Will average households be better off? We do not know. Will the cost of electricity rise or fall? We do not know. Will businesses be better off? We do not know. If we do not know the answers to these questions we cannot proceed with this legislation. It is interesting to note we are debating this legislation during the May sittings, when it could have been done and dusted in the March sittings. That shows an even further lack of accountability and transparency, evidence, research and, most importantly, a lack of consultation on behalf of the government. The only reason this fell off the Notice Paper in February was because the government lost its ability to govern. We are talking about major reform. There were some serious housekeeping matters, as well as serious challenges; there was one member of the government on leave, another had retired and left the seat of Blain vacant and three others deliberately walked in a major protest about the government’s agenda and its operations.
We saw this major reform, which was to be done and dusted in March, pushed out, and in the meantime the Blain by-election came on. I welcome the new member for Blain to this House. I stood at the Woodroffe booth all day campaigning for the Labor candidate and admired the very big and expensive billboards which had the new member for Blain announcing and promising there would be no sale and privatisation of Power and Water assets. That was an election promise he articulated loud and clear.
Welcome to the rough and tumble of the CLP, member for Blain, because the people in your electorate heard it loud and clear. They will now hold you to account, and this is being debated today. It is probably a very grassroots suggestion from another member of this House, but it is about reading the fine print.
Let us deconstruct a piece of this legislation, because, as my colleagues on this side of the House have outlined, the bill tells us privatisation is at the core of this issue. Clause 53, part 5A, says it in black and white:
A regulation can be made to sell parts of Power and Water to a corporation or company. Who has this power? The Treasurer does. What does the he say? ‘Trust me’. It is not good enough, when looking down the barrel of major reform to the Northern Territory’s ownership of public assets, to hear the rhetorical one liner, ‘Just trust me’.
Member for Blain, you will want to look into that wording in the act. You will want to talk to the Treasurer about this intent, and you will be accountable to the people who have very recently elected you.
An evidence-based approach: I ask the Treasurer, the shareholding minister, for some evidence, so I can tell constituents in the Barkly, who I represent, why the CLP is doing this.
I well remember the night the Treasurer provided this House with this small booklet, The National Electricity Market: A case study in successful microeconomic reform. It is an interesting document produced by KPMG. I looked through it, saw the argument of liberal economic rationalism and then tried to relate it to what the Treasurer was saying about a key reform agenda and connecting to the national network. There are some great graphics in here, and one of those represents the map of Australia with the big eastern seaboard states and South Australia.
We have Queensland, New South Wales, Victoria, Tasmania and South Australia, which represent big energy consumers. They are all linked and networked, and the Treasurer is definitely the big picture operator. He said, ‘We have to do this separation so we can be part of the big picture and connect to the east coast network. We can be part of this new way that has been moving for a couple of decades.’
I went back to the Barkly and told that story, but I did not have any evidence to continue the debate. In other words the first question which emerged was, ‘What does the CLP government want to do? Do they want to connect us with transmission lines to one of those big states? Is that the plan?’ We do not know. In debate, however, it came up; what about the reverse, connecting the Northern Territory to the east coast via grids or pipelines which will carry gas to support that hungry east coast market? The Treasurer did talk about that, and I have talked about that extensively in the electorate and across the wider parts of the Northern Territory. In terms of this debate and the priority of the Territory becoming a part of the national electricity market, there was no definition. There was no evidence and empirical research around how that would take place.
If you look at the track record of the CLP, the first major disaster was the gas to Gove issue where we knocked out some significant global explorers once the northeast Arnhem Land and Gove market was taken out of the picture. Once the decision was made to go down the route of not building a pipeline and not looking at a major customer in the northeast corridor of the Northern Territory, significant global explorers walked away and went back to places like Africa and offshore tenements, and started to look at investing there because the actions and rhetoric of the CLP government took that out with the stroke of a pen.
Transmission lines to connect us to this network and pipeline grids were merely rhetoric. There is no substance and no evidence. At the same time, constituents tell me, and I agree, that we are the Northern Territory and very different to the east coast players. We have massive geographic areas to cover, significant climatic and environmental challenges and a very small customer base.
The Treasurer provided this document to the House; I read a little more, and there were some interesting quotes, particularly from part 2.6.7 titled, ‘Open and adequate consultation across all stakeholder groups’. It describes how the National Grid Management Council and National Electricity Market operated over a couple of decades in its major reform in which it took its constituency with it to make sure it got it right. The National Grid Management Council consulted widely in determining the model for the National Electricity Market as it developed its code. The booklet says:
What I took from this document, in getting it right and taking an evidence-based approach – so the Treasurer is trying to convince us – was it was very important to get the consultation right. Have I seen that in the Northern Territory? No. Have I seen it from the CLP government? No. Are people in the wider Northern Territory, across the regional and remote areas, asking questions? Yes. Have they been provided with the answers? No. However, we are staring down the barrel of major legislative reform which will change the nature of public asset ownership in the Northern Territory – with significant ramifications for the future – with no evidence and no supporting research to convince us it is a good move. I cannot support the legislation on those terms.
Moving further into the booklet, on page 36 it mentions uncompetitive industry structures. It says:
Once again, with no evidence and research, what is the agenda here? The CLP government and Treasurer are open for criticism from people across the Territory saying this is merely the sale of a cash cow, and, with that fine print in the legislation, a step towards privatisation through the disaggregation of the Power and Water Corporation.
The federal Liberal agenda has entered the arena with a promise of cash straight up for the sale of public assets. It seems to be fitting in with a national agenda; the Treasurer then came home from a meeting of his national counterparts, who patted him on the back saying, ‘You go for it’. I do not think any of them understand the Northern Territory. Did he ask, ‘Does anybody really understand operational conditions, the challenges in engineering and logistics?’ No, they just said it is a good idea because it is a Liberal agenda. I noticed the Treasurer mentioned a couple of Labor members in that crowd; once again I ask them to come to the Northern Territory, look at our specific conditions and then make their judgments.
This document provided by the Treasurer was quite interesting. There was interesting reading on page 46, with lessons to be learnt. It says:
The sustainability of this major reform is another concern, the result of this legislation passing through the House today.
What will be the on-costs? What hidden costs will emerge? Members on this side, not only the Territory Labor opposition, but Independent members as well, are calling for that important research to take place to find evidence. Ironically, this would have already been done and dusted had the government not mismanaged its affairs so badly that it had members walk, leave and retire. It would have already gone through, but we now have a chance to once again mount the debate, stop the bus and say, ‘Let us go back to the drawing board and present the evidence clearly’.
The Treasurer, in an absence of any of that material, gave me the opportunity to start looking in other areas. I am sure he would be interested in the Electrical Trades Union report written by John Quiggin, which debunks the purported benefits of disaggregation and privatising electricity utilities. There is a fair bit of history in that debate going back to early privatisation agendas, the creation of the national electricity market and subsequent events. The key point from that evidence is privatisation has not necessarily delivered the benefits touted by its proponents, such as the Treasurer of the Northern Territory government. Privatisation in Australia and elsewhere has driven up tariffs, reduced reliability and cost jobs. There is a lot of material around that, but the Treasurer is in complete denial there is any privatisation. However, we see the fine print in the legislation to allow the next step down that road after the split of the Power and Water Corporation.
There is also the Treasury information paper, published in February, which you see is the blueprint for privatisation when you look into it. It is another focal point we can use in this debate and it goes back to where the member for Araluen started, with the Renewal Management Board and the 2012 mini-budget. When we are debating costs around the split, the Treasurer should take us back to those original costs. They were tagged the ‘$1m men’ because there was significant money allocated and spent. As the member for Araluen said, a significant amount of the agenda was devoted to the set play to score a try in the corner, split the Power and Water Corporation and open up the ability to privatise further down the track. The member for Araluen was quite clear that this agenda started in 2012, and I can remember that interim report being presented to this parliament.
I enjoy the AGM at Tennant Creek High School because the financial reports presented each year are far more sophisticated than what was presented to parliament by the CLP government regarding a significant spend of millions of dollars. I am not sure how many millions of dollars it was, but it was significant. We can start adding that to the total of what this venture will cost. My research, looking at other jurisdictions in the country, shows it to be around the $10m mark. The Treasurer has admitted a position of about $7.8m. Do we really know? No, we do not. It could be around $7 to $8m, it could be $10m or it might be more. We will then rack up costs already allocated to this exercise, going back as far as 2012 to the mini-budget and the Renewal Management Board.
The Treasury information paper also talks about efficiencies and keeping a lid on costs and prices. We saw a story of efficiencies when the Hudson Creek substation failed and caused the catastrophic blackout of tens of thousands of customers in the Top End. We saw that in comparison to the previous Labor government’s investment in the Power and Water Corporation, with new substations at Archer, Snell Street and Casuarina, significant investment in generation at Weddell and Owen Springs, added to investments around sewerage and water and the regions to address this.
We saw where that policy was heading, delivering those efficiencies. Under the Renewal Management Board we saw cuts to repairs and maintenance, staff, including significant corporate knowledge at the top of the tree, and those very concerning cuts to safety and training. What did it get for that policy? They got a mega blackout and found themselves scrambling to try to explain it to Territorians. When we talk about efficiencies we have a history there, and we must acknowledge that before we go any further with this debate.
On the subject of costs, the Chief Minister refuses to supply any forward estimates or actual costs around what this will be for the future. It is not only this time around in 2014, where we are floating between $7 to $10m, maybe more, adding in the Renewal Management Board and other significant costs. These are already major budget items, but we will also define some new costs spelled out in the Northern Territory electricity market reform information paper by the Department of Treasury and Finance.
It talks about competition as the ultimate arbiter, and ramping up competition. However, it says:
The Treasury paper says the government is conscious of these costs, but yet will not be honest with Territorians. It will not open it up for true debate, once again in a lack of evidence and transparency approach.
Representing constituents from regional and remote areas, there is significant concern about the disaggregation of the Power and Water Corporation. There is significant concern around the ability to privatise these separate entities once they are created, the costs and where it will leave us as consumers in regional and remote areas.
I looked for evidence around that debate. The Treasury paper has a dot point which says:
Therefore, before this legislation even passes and we see the split of the Power and Water Corporation, with the real revenue generating components being lined up for sale, we have a shortfall in Indigenous Essential Services for the bush.
The Treasurer says, ‘Don’t you worry about that. That is all okay. That money will continue to flow.’ Where will this be from, as the revenue raising components, the cash earners within the Power and Water Corporation, such as generation, start to be siphoned off? The Treasurer is undoubtedly an economic rationalist, the larger Liberal. He knows there will be companies coming across the border looking to get into this power market in Darwin and Palmerston, because that is where the big customer base is. ‘Do not worry, bush, you will be right. It will be okay’, as the Power and Water Corporation loses its revenue raising capacity. It is the organisation administrating Indigenous Essential Services; there is a logical way for it to go, and it is back to government asking for more money. In such tight fiscal times, decried by the CLP, where will this money come from? The Treasurer says, ‘Don’t you worry about that. Just trust me.’
I looked at some documents and there is a good one here; I wonder whether the Treasurer has seen it. He will probably see one in his own power bill; it is a document with some facts about Power and Water which came with my utilities bill. There is one part which relates to thousands of constituents who live in regional and remote areas. ‘Will things change in remote communities? The evidence, the research and the information says no, they will stay the same.’
That was all I got. I noticed the graph and the interpretation for consumers showing the Northern Territory’s position on the residential electricity tariff comparison. I noticed that New South Wales, South Australia, Tasmania and Victoria’s electricity prices are all higher, yet, Treasurer, you are telling me they went down the national electricity market pathway and reaped all the benefits of lower costs. They are all higher on the graph, and have millions of consumers. We have tens of thousands of consumers, but their graph is way above ours. All of those benefits and that good news is putting them way above the Northern Territory, and we are going down that same road.
I have real concerns about this; there has been little evidence. A paper about the National Electricity Rules was tabled in parliament on 20 March 2014. It is called The Committee on the Northern Territory’s Energy Future public hearing 20 March 2014 Power and Water Corporation Responses for Tabling, and it says:
Mr VATSKALIS: A point of order, Madam Speaker! Pursuant to Standing Order 77, I seek an extension of time for the member to finish his remarks.
Motion agreed to.
Mr McCARTHY: Thank you, Madam Speaker and member for Casuarina. I repeat:
Treasurer, saying ‘Just trust me’ is not good enough. This is major economic reform. This lacks evidence and research, and has been pushed through, parliament. As I have said a number of times, it could already have been done and dusted – shock, horror! It is being debated again and it should be pulled. We should go back to the drawing board and make sure we get this right. It can be simply done with a cost-benefit analysis in tune with the Territory’s unique position.
As the Treasurer started this journey with me, providing the House with this document, this is about the big players on the east coast. This is about the future you desire for the Northern Territory, and this is about a future we can all share in. However, there are many major steps on the path. Is the Territory ready for this? Will our jurisdiction support the economic rationalism you desire?
We do not have the answers to those questions, yet you are asking this parliament to sign off on major legislative reform. I have put it quite simply; many members in this House are concerned. I have also had this conversation on behalf of a big constituency across a vast geographic area which is also very concerned when there are significant changes to the big end of town and no answers for them other than, ‘Trust me; it is all right, it will all stay the same.’ Many of those constituents are on fixed incomes; many are already reeling under the price hikes we have seen over the past 18 months, and many are very concerned about Northern Territory utilities assets becoming, essentially, private property in the future. Thank you.
Mr CONLAN (Central Australia): Madam Speaker, I support this and think the member for Barkly is right to say this should have been done a long time ago. You had 11 years to do it. If you showed the intestinal fortitude during your 11 years in government we may have had this ‘done and dusted’, to quote you.
Today I said to the Treasurer, ‘Can you provide me with a couple of points, a few facts and figures because I would like to contribute to this debate?’ I thanked him and his office, which provided me with not only talking points, but almost a speech. I might read it word for word because it articulates beautifully what the government is trying to do here.
Let us set the scene. The Power and Water Corporation is one of the last Australian government monopolies covering water, sewerage, generation, networks and retail. Other members may have used some of these points, so you may have heard this before, but they are worth reiterating in such an important debate. Until the early 1990s the traditional model for delivering electricity and water supply across Australia was through government-owned monopoly utility entities. However, in the mid-1990s, state governments began to undertake market reforms and restructure of their utility companies to encourage more reliable and efficient services.
These reforms included the structural separation of utility companies to their component businesses, introducing market competition and establishing independent economic regulation. In recognition of the need to coordinate this economic reform nationally, COAG agreed to national competition policy in 1995. From that time, eastern and southern states began to pursue the development of the National Electricity Market and nationally consistent water reform.
The Territory chose to remain outside the National Electricity Market at that time; however, we still commenced a reform program in 2000 which sought to meet our national competition policy commitments. Those reforms included the abolition of the statutory monopoly model for electricity supply; the removal of regulatory barriers to competition in the electricity generation and retail sectors; the introduction of retail competition; implementation of a third-party access regime for electricity networks; and the establishment of an independent regulator – the Utilities Commission – to regulate network prices, licence market participants and monitor conduct.
In 2001, reform of PWC’s corporate governance framework was introduced through corporatisation under the Government Owned Corporations Act and the Power and Water Authority became the Power and Water Corporation. The new framework provided for the adoption of a shareholder model for corporate governance, involving greater financial and operational autonomy from government and the establishment of a board of directors responsible for the strategic management of Power and Water and directly accountable to the Shareholding minister for financial performance. However, in order to maximise economies of scale and scope, Power and Water remained an integrated utilities entity.
Since 2001, various forms of administrative separation of the PWC’s businesses have been attempted to improve accountability, transparency and efficiency, including operational separation of component businesses, accounting and financial reporting by business lines, and the introduction of the ring-fencing code to ensure Power and Water did not discriminate between competing businesses and its own affiliates. Despite these measures, the PWC’s integrated legal structure has not always translated into clear benefits for Territory consumers.
The integrated structure of Power and Water dilutes incentives for it to operate as efficiently as possible. It does not result in transparent financial management, and serves only as a deterrent for competition in the electricity market. Fourteen years after the introduction of these market and regulatory agreements, the Territory remains the only jurisdiction in Australia where there is no competition in the electricity supply chain other than the small retail share gained by QEnergy.
The PWC’s financial position has always been deteriorating over this period, and in 2009, in response to concerns about financial sustainability, the Reeves review was commissioned. The subsequent report recommended significant increases in utilities tariffs to ensure the PWC could achieve financial sustainability. However, Power and Water continues to perform below industry benchmarks and remains heavily reliant on taxpayer funding and borrowings.
The current situation: as part of the 2012 mini-budget the government started a program to improve the efficiency of the PWC. Over the year following the mini-budget, the government also considered various options to assist the PWC achieve commercial sustainability and to address the Territory’s ability to attract competition into the electricity market. Together, these reforms are expected to achieve the overriding objective of providing safe, reliable and least cost electricity to Territorians.
As I mentioned earlier, Treasury’s main focus has been on the regulatory reform aspect of the program. Structural separation results in complete financial transparency from an owner/shareholder perspective, as it ensures greater exposure of the various lines of business to external reporting requirements and external financial audits. It also requires the formalisation of all contractual arrangements between separated lines of businesses, and it is this level of transparency and separation that the PWC has not been able to achieve to date. The separation of monopoly and contestable functions also allows the boards of each of the three GOCs to exert an increased degree of specialisation in their particular areas. This should lead to productivity and efficiency gains over time.
Given accounting separation has not been achieved by the PWC and legal separation alone would continue to see a single board faced with the conflicting objectives of monopoly and contestable operations, structural separation is considered the best option to achieve financial transparency and efficiencies with the Power and Water Corporation. It also increases prospects for competition in the Territory’s electricity, generation and retail markets.
A consequence of existing arrangements is that all Territory householders are bearing the cost of an inefficient utilities sector through the need for government to be the primary funder of utilities infrastructure and services in the Northern Territory, diverting resources away from core government responsibilities such as health and education. Further access to efficient utilities services is an essential input for industry; therefore, improving the efficiency of these services will support economic growth and development in the Northern Territory. Although the Northern Territory remains a small electricity market compared with other jurisdictions, technological improvements mean that economies of scale can no longer be a justification for retaining the Power and Water Corporation’s integrated structure.
In addition, a degree of investment uncertainty would continue for new competitors looking to establish in the Territory if the design of the structure of the Territory’s utilities sector was to remain different from other states. Therefore, regulatory and structural reform of the utilities sector is in the longer term economic interests of the Territory. This legislation creates two new government corporations, retail and generation. Networks, sewerage and water will stay with the old Power and Water Corporation. A wholesale electricity market is to be designed in concert with the national regulator and industry; the Northern Territory will move to the national regulatory system and fall under its rules and regulations, making it consistent nationally to do business in the Northern Territory. New generation has already been muted by several players, giving competition choice to larger consumers. APA has announced a study into joining the Northern Territory gas network to eastern networks, again leading to competition. Last week’s COAG meeting adopted the following motion:
That is a great pat on the back for our minister. At the same time that the whole country was splitting up inefficient monopolies and trying to cut costs and debts, the Leader of the Opposition was on the federal Ministerial Council on Energy and did nothing to change these inefficiencies or adopt reforms she voted in favour of. I say again, yes, member for Barkly, this should have been done and dusted a long time ago. Not once has the Opposition Leader clearly stated why this simple reform process should not happen or offered one economic or rational reason why she opposes it.
The Opposition Leader then resorted to, as usual, thuggish personal attacks on the Managing Director of Power and Water Corporation, John Baskerville. Baskey is a legend of the Northern Territory and has been around for a long time. He has done a fantastic and professional job in managing change processes and personally handling the black-out in March. This is typical of people who are trying to cover up their mistakes, that is, the mistakes of the Opposition Leader.
The Northern Territory’s Utilities Commission has recently allowed a 42% increase in network charges, with the Treasurer himself strongly objecting as it would never have been allowed under the AER if the Northern Territory was in the national system. This increase would only affect large users, had the government still capped household prices.
Let us look at some of the debt. The PWC debt will reach $1.6bn in two years, which is $7000 per person in the Northern Territory. This will attract an interest bill of about $1400 a year per household, clearly more for large users. That is $1.6bn in two years, $7000 per person.
The government will not be selling assets and will continue to set the price of electricity. Some questions: does the Power and Water Corporation make a profit? The answer is no. Every household, remote community and business is subsidised by the Northern Territory government, through the taxpayer, via the PWC. All taxpayers funded subsidies are as follows:
community service obligations $61m
Total taxpayer-funded subsidies for 2012-13 were $155m, on the basis the PWC makes a loss of $114m. In fact, the $649 dollar subsidy per person is based on total taxpayer-funded subsidies.
That is one myth dispelled. Does Power and Water make a profit? No. Is PWC being sold off? No. The government is splitting the monopoly into three government owned corporations to provide transparency and increase efficiencies. The government will still own the corporations and they will not be sold. The Northern Territory will be joining the national market for rules and regulations, which has been happening in other states since 1991. The Northern Territory must have rules and regulations in line with the rest of Australia to support future growth, like we have with rail, roads, airports and our ports.
Will the price of electricity be handed over to someone else? No, the government will still set the price. Will the seniors discount change? No, it will stay the same. Will things change in remote communities? No, things will be exactly the same.
Let us look at repairs and maintenance. This tells a telling story; in 2009-10, repairs and maintenance cost $61m, in 2010-11 it was $56m and in 2011-12 costs were $72m. As it sits in 2012-13, repairs and maintenance costs for PWC sit at $80m.
We have painted a pretty clear picture why this is necessary. Member for Barkly, you are right, this should have been done and dusted a long time ago, but it has taken a Country Liberals government to bring this bill to parliament. I wholeheartedly support it.
Mr KURRUPUWU (Arafura): Madam Speaker, the Power and Water Corporation caters for all sectors of the Northern Territory in the provision of power generation, water and sewerage services. Three bills before the Northern Territory parliament propose to break up the Power and Water Corporation into three separate areas. These are: the Power Generation Corporation Bill; the Power Retail Corporation Bill; and the Power and Water Corporation Legislation Amendment Bill.
The cost of electricity in my electorate is already far too high. These changes will mean higher prices. Most of the people in my electorate use power cards; every time I move around my electorate people are complaining about the cost of electricity. These power cards are being used more today than they were a couple of years ago. The cards do not go far anymore and people need to buy more. People in my electorate know they have to pay more money for more power cards, but do not understand why.
I have tried to explain why costs are always going up. Most people believe the government is making it hard for them to run their homes. Everybody knows modern houses require electricity, water and sewerage services. Aboriginal people in my electorate need an explanation from the government about the continuing increases.
The government now wants to split the Power and Water Corporation. How will people in remote parts of the Northern Territory, including my electorate, feel about the proposed changes? Can the government guarantee the cost will not rise even higher than under current arrangements?
I have been told by many people, both here in Darwin and back home in my constituency, that the government will leave the bush even further behind in the cost of living because of this proposed change it wants to make to the Power and Water Corporation.
The government has not clearly explained what these changes will mean for the people of the Northern Territory. The government is moving too fast and needs to make it clear what the costs will be after it splits the Power and Water Corporation, and what will happen to families and businesses in our community.
Mr WESTRA van HOLTHE (Primary Industry and Fisheries): Madam Speaker, I support this important piece of legislation which will allow the separation of the retail and generation businesses from within the Power and Water Corporation.
As the Minister for Essential Services with responsibility for operational aspects of the Power and Water Corporation, I support this legislation to reform the Northern Territory’s utility industry for the benefit of all Territorians.
The current structure of the Power and Water Corporation is simply not delivering sufficient value for money for Territorians, despite the massive investment taxpayers have made and continue to make in this utility.
Simply put, the Power and Water Corporation will deliver better returns for all Territorians if the generation and retail aspects are run as stand-alone entities.
This legislation will allow the Power and Water Corporation to make major structural changes and bring this utility into line with other Australian utilities. The Power Generation Corporation Bill will establish the Power Generation Corporation, which will be responsible for broader electricity generation functions currently undertaken by the Power and Water Corporation. The new corporation will be responsible for operating all generation assets in the Darwin/Katherine interconnected system and regional centres.
The new Power Generation Corporation will sell electricity it generates to the Power Retail Corporation, third parties and private sector operators licenced to sell electricity in the Northern Territory.
It is important to note the Power Generation Corporation will not be responsible for the generation of electricity in Indigenous communities. It disheartens me a little to hear contributions from some of the members on the other side about what they consider concerns with the breakup of Power and Water, and how it might affect their remote communities.
I reiterate that the generation of electricity in these communities will continue to be undertaken by Indigenous Essential Services, a not-for-profit subsidiary of the Power and Water Corporation, so nothing will change there ...
Mr Higgins: Say it again.
Mr WESTRA van HOLTHE: Say it again? The generation of electricity in these communities will continue to be undertaken by Indigenous Essential Services, a not-for-profit subsidiary of the Power and Water Corporation. In those remote communities nothing will change.
Mr Tollner: I do not know how many times you have to say it, but I think you will have to keep saying it.
Mr WESTRA van HOLTHE: I pick up the interjection from the Treasurer. They say you must say something about 10 times before the message starts to get through. You must say things ad nauseum until you are sick of the sound of your own voice repeating the same message before you can have any confidence the message is starting to get through.
Anyway, I digress. The recent inaugural meeting of the COAG Energy Council adopted a motion acknowledging and supporting the continued reform process being undertaken in the Northern Territory. The COAG Energy Council also noted the separation of Power and Water was the:
It also said the Power and Water Corporation is:
This move has been roundly supported by the new COAG Energy Council. Both South Australia and the ACT have recently undertaken considerable reforms in their utility industries, which has resulted in greater consumer benefits and the lowering of state debt for utilities.
These reforms to the Power and Water Corporation are good news for Territorians who, as taxpayers, are owners of this utility. However, most importantly for Territorians who are consumers of their product, these reforms will see the better delivery of power services to all Territorians.
To be really frank, the Power and Water Corporation needs to cut its costs and debts to become more efficient. To do this we need to adopt these reforms and bring the Northern Territory utility into line with all other Australian states and territories which have enjoyed the considerable benefits of splitting the retail and generation components of utility companies.
These reforms are in the best interests of all Territorians for now and the future. Those on the other side do not get this, and all they are trying to do is make some political capital out of what has been a difficult decision. These are tough decisions, but that is why this government was elected. It was elected to make tough decisions for the benefit of all Territorians, and we will continue to do that.
Every other Australian state and territory has backed the Northern Territory government’s reform of PWC. I again congratulate our Treasurer for bringing in these changes, and I note the following motion adopted at the recent COAG Energy Council meeting in Brisbane:
Evidence before the Northern Territory’s Public Accounts Committee shows that reform of the Power and Water Corporation is necessary to restrict the spiralling debt, which will hit $1.6bn in two years’ time. These reforms started in other Australian jurisdictions as part of the COAG national agenda more than two decades ago. The Northern Territory is now just starting to catch up with the rest of Australia, not that I should be surprised.
After 11 years having to endure a completely risk averse Labor government in the Northern Territory, one which had no political courage and no political will to make tough decisions which would make Power and Water more effective, I am not surprised we are staring down the barrel of $1.6bn debt for Power and Water.
The member for Araluen gave a great speech in this parliament a short time ago on this Power and Water bill. She berated the former Labor government for its slackness, recalcitrance and inability to drive necessary reform for which we are now paying the price. I am pleased that after just 18 months in government we are here, having made some tough decisions, and moving on and getting the job done.
In separating the Power and Water Corporation, it will ultimately come under the national regulator, the Australian Energy Regulator, which looks at the entire electricity network and makes determinations based around a different set of rules. These reforms were adopted, as I said, by all Australian jurisdictions years ago, and we must change in order to move forward as a significant player in the emerging growth of northern Australia.
In line with other major infrastructure such as ports, rail, road and airports, the Northern Territory’s energy sector must also move towards the same rules and regulations as other states.
I support this legislation; the opposition is doing what it does best, whining and carping about this, and it has expressed a view of not supporting these changes. Given the lack of political will and courage which was the hallmark of Labor’s governance over 11 years, I am not surprised.
Mr GUNNER (Fannie Bay): Madam Speaker, I thank the member for Wanguri for the considerable body of work she has produced in looking at these bills. She has spent countless hours going through the detail, talking to stakeholders and developing the position of the Labor Party.
It is disappointing we are debating this today, before the parliament has heard back from the Public Accounts Committee about the work it has done on Power and Water. It made sense for that body of work to be brought back into the Chamber and put on the record. We could have heard contributions from committee members, as well as the evidence they found during the inquiry. We would have had that prior to the debate and passage of these bills.
It would have been a sensible way of handling this. We have six days of sittings with the budget next week, so we have the time and capacity for members to debate the PAC’s, I assume, majority dissenting report, and for the public to hear the debate and have access to members.
Unfortunately, that has not happened. We have the debate today on the three bills the Treasurer has brought forward, and this bill reminds us of the greatest broken promise in Territory history.
Mr Tollner: What?
Mr GUNNER: It is a tough title to win, Dave, but the CLP’s promise in August 2012 to cut the cost of living, which was followed less than three months later by a $2000 rise in the average family’s Power and Water bills, is the greatest broken promise in Territory history. It is not a good title to hold, and in debating these bills around Power and Water, the issue that most comes to mind for Territorians is the price they pay in their power bills every quarter. There is no evidence that what the Treasurer is doing will reduce the cost of power and water to Territorians, whether they are families or businesses.
During the PAC hearing we learnt there was no cost-benefit analysis done by the government on this bill or these decisions. These are massive decisions to structurally change Power and Water. That has to be a deliberate decision by government because we have a very professional public service; I have no doubt a public servant, at some stage, said, ‘A cost-benefit analysis on a decision like this will be crucial and a very important thing to do’. Someone has had to say they will not do a cost-benefit analysis and will push through.
That is the attitude we have seen from the Treasurer; he is a politician who likes to crash through. The government has taken a decision not to analyse the benefit of splitting Power and Water. The Treasurer has said that by splitting Power and Water, magically, there will be downward pressure on power costs. ‘It will just happen, trust me’, the Treasurer says, ‘I am not going to do a cost-benefit analysis. I do not want that work to be done; just trust me, prices will go down.’
The best argument I have heard against that is around fuel prices in the Territory. We are a small jurisdiction with not many companies. There is no downward pressure on fuel prices at the bowser in the Northern Territory. It is a problem government after government has struggled with, but the Treasurer says to trust him that power prices will magically go down, and there is no need for a cost-benefit analysis.
All we have seen from this government is prices going up. This is a direct breach of the promise it made to Territorians; I remember the CLP television advertisements where candidates lamented the arrival of a quarterly Power and Water bill. They said, ‘We do not know how we are going to pay for this’. After the CLP was elected, it put Power and Water prices up for the average family by $2000 a year. I am yet to hear how that makes it easier for people to pay their Power and Water bills.
The easily understood promise made by the CLP was that it would cut the cost of living. Instead it put up Power and Water bills. We are now talking about the split of Power and Water, and the Treasurer says, ‘Just trust me, it will go down’. He has a magic belief downward pressure will suddenly be applied and prices will go down when we know all the evidence, as seen elsewhere, shows it leads to rising costs.
The people who will pay the price for these bad decisions by the Territory government are ordinary punters and Territory businesses. Average families are paying more than $2000 a year extra for electricity under the CLP, and further price rises are inevitable while the government pursues an ideological agenda, rather than any sensible approach to Power and Water.
It is extraordinary the government deliberately chose not to analyse the benefit of this decision. This goes to the fact the CLP knows any cost-benefit analysis would show it is wrong and this magical decrease in power bills will not happen. It was a deliberate decision to push through these bills before hearing back from the Public Accounts Committee, in the absence of any cost-benefit analysis. All we heard from Malcolm Turnbull when he railed against the NBN was that you cannot make decisions like that without a cost-benefit analysis, yet we have the Treasurer saying, ‘Don’t worry, just trust me. It is going to be okay.’
Territorians do not trust you because you broke a very clear promise around cutting the cost of living. It is hard to say which is the greatest broken promise; there were some serious contenders, such as the promise to cut crime by 10%. Any public servant who lost their job after the CLP was elected would probably find the ‘your job is safe’ guarantee right up there as a bad broken promise.
The broken promise on Power and Water affected everybody. Every household and business was betrayed, in the Top End, Central Australia and remotely. Every Territorian is paying more for their power, water and sewerage under the CLP because of that broken promise.
The CLP knew everything before it was elected. All the books were on the table, it went through a full estimates process and still chose to make a promise to cut the cost of living. Three months later it did the exact opposite.
It was galling in many ways, especially in hindsight, to think how much the CLP railed, and still rails, against the carbon tax, which saw power and water prices go up by $135 per year, when it made the extraordinary decision to put up Power and Water prices by $2000 a year, 15 times more. Yet the CLP still rails against the carbon tax and tries to ignore the impact its decisions have had on ordinary Territorians.
No one buys the idea that decision by the CLP has not hurt Territory families. No one buys it that the carbon tax is a bigger impost on Territorians than the CLP decision to increase the cost of power and water in the Northern Territory. Not only did it increase the cost of living, it increased the cost of doing business in the Northern Territory. From its own figures, power and water increases cost the average small business $150 a week, or $7800 per year.
One of the biggest complaints businesses made was not just that prices went up, which they had to pass on to the consumer, but that no notice was given of the decision. They had no opportunity to prepare or do anything within their business model or set up to accommodate this decision to increase costs. This is all passed on to the consumer, so Territorians were paying more at home when the bill came in, and they were paying more when they went to shop at local Territory businesses, which makes things very difficult.
I know retail outlets were saying they had to pay extra for power and water at a time when they were worried about internet shopping. People were buying online from companies not being hit by the same impost as them. It put serious pressure on retail businesses at a time they did not need that pressure.
Let us look at the approach the CLP has taken to running Power and Water. It sacked the entire Power and Water board, the CEO and several other senior executives, including the general manager of power networks. It put in place a CEO who had not worked in the industry for over a decade. When things went wrong, like they did in March, the Treasurer blamed the workers. It was nothing the CLP had done, nothing to do with the cuts it had made to Power and Water and nothing to do with any of the decisions it had made around the running of Power and Water. Apparently, it was the workers.
The minister hung onto the blackout report until after the Blain by-election, which made political sense to the Treasurer but undermined what confidence remained in the government. When he released it he said it was the fault of union cronyism.
We know the Treasurer can be loose with the truth at times, and the media immediately said to him, ‘Where in the report does it say that? You are saying it is the fault of the unions, where does it say that?’ He had to admit he made it up. I think he said he had applied ‘creative licence’, which is essentially admitting he made it up. Disney has creative licence, JK Rowling has creative licence; the Treasurer of the Northern Territory should not have creative licence. People expect better of the Deputy Chief Minister and Treasurer. They should be able to rely on what he says, and it is extraordinary that when he finally released the blackout report after the Blain by-election he chose to blame the unions, although they are not mentioned in the report. It is clear you cannot trust the Treasurer, and he seems surprised Territorians do not trust him when it comes to these bills and the decision by this government to split up Power and Water.
People have already seen their bills go up and the agenda of this government to make Power and Water a profit-making entity. There is only one reason you want to make it a profit-making entity: to sell it. The Chief Minister did not rule asset sales in or out during Question Time this morning. They have seen the agenda of this government to constantly put up people’s power and water bills and make Power and Water a profit-making entity.
On this side we see Power and Water as an essential service; people have a right to power and water. They are basic services and you should be able to afford your power and water bills. You should charge the most you can – we are not a charity – but we are providing an essential service; people have a right to access power and water. The CLP see them as a luxury items and the Power and Water Corporation as a profit-making entity. If you cannot afford it, that is bad luck. That is the wrong approach to take to Power and Water, and it is why people do not trust this government when it comes to this decision. They do not trust the government on these bills the Treasurer has brought forward because they do not agree that Power and Water is not an essential service. It is an essential service, and people have a right to power and water at a price they can afford.
When making decisions around Power and Water, you must think about those who live in the Territory on the lowest wage, those who are poor, and you must make a decision based on what they can afford. We should not be pricing people out of the Northern Territory. They have a right to access power and water. Unfortunately and tragically, you are deliberately making decisions which have broken election promises to cut the cost of living, and instead you have increased the cost of power and water and are pricing people out of the Northern Territory. That is a tragic decision for a government to make.
You are a government for Territorians and more than a balance sheet. You must run a tight budget, but as a government you are about more than that. You have a responsibility and a duty of care to Territorians, and the decisions and actions you have made around the Power and Water Corporation show a dereliction of that duty. It is tragic that is the approach you have taken to Power and Water, that you would deliberately break an election promise to cut the cost of living and deliberately make decisions which hurt Territorians, yet you are surprised when people call you on it.
The member for Wanguri has done an amazing amount of work going through these bills in detail, why they do not work and the concerns we have with the decisions you are making. When you get to the principle of why we are opposing these bills, it goes to the heart of the fact we do not trust you and Territorians do not trust you.
You are making decisions to put up the cost of power and water with no evidence to show these decisions will do anything to reduce prices. The CLP will do anything to see Power and Water run more efficiently; you have talked about tripling the bureaucracy. You are not doing anything which will see Power and Water run efficiently or cost-effectively. You made the deliberate decision to not do a cost-benefit analysis on this policy decision. You are making decisions which actively hurt Territorians. It is extraordinary.
We know a cost-benefit analysis or a risk analysis on the split of Power and Water has not been undertaken. We know secret discussions have been held with private sector electricity interests behind closed doors, and the Leader of the Opposition talked about the evidence behind that today. We know the bills provide for the transfer or sale of Power and Water assets by regulation. The Treasurer says, ‘Trust me’, and he is asking for the authority to do this by regulation, so it would not even come back into this Chamber. The minister could make it happen.
We know the Chief Minister and Treasurer have backflipped on their commitment not to privatise Power and Water without a mandate from Territorians at a general election. This morning during Question Time the Chief Minister refused to rule asset sales in or out, and that includes TIO. These are big decisions which deserve the mandate of Territorians and should be taken to elections.
The CLP cannot be trusted with the Territory’s public assets. We do not support these bills and we are extremely concerned by the decisions the CLP is making around Power and Water. One of the things I find extremely concerning, going back to the report the Treasurer held on to until after the Blain by-election, is that he blamed the unions, even though they are not in that report. The fact he used creative licence concerns me, and the fact he made up the reason for the failure means we believe he is not serious about making sure it does not happen again.
When you choose political point scoring as a way of dealing with something like the blackout, it means you are not rolling up your sleeves and addressing the problems behind it. You table a report, you point fingers at the unions who are not mentioned in the report and are not doing the work. You are not serious about trying to fix the problems which led to the blackout in the first place. The CLP, in the split of Power and Water, is quite clear, especially with the decision to transfer power to the minister by regulation of our assets, that the agenda behind this is about the sale of the company. No one believes for one second it is about anything else. Splitting Power and Water into three divisions does not provide a single efficiency. We know the cost of the split is around $7m over the next two years, which is already triple the Treasurer’s guess at a recent press conference, and the cost of running three different entities and structures with three separate levels of overhead costs will continue to be more expensive.
You do not need to split Power and Water for competition and you do not need to split it to enter the National Energy Market. The electricity in this building has already been purchased from QEnergy; we heard the member for Port Darwin talk that up in his contribution to this debate. That is happening under the current regime. You do not need to pass this bill to allow competition in the Northern Territory; you can already be part of the National Energy Market.
I understand residential consumers and small businesses can only purchase from Power and Water, but you do not need the split to provide a new retail entrance. The barriers are economic, not structural. We are a small market, and splitting Power and Water will not make it any more viable for new entrants. The CLP has done nothing to justify the split; there are no independent reports, no cost-benefit analysis. We know from the experience of other states that the split and privatisation of electricity providers has only led to increased prices. The CLP has offered nothing to suggest the same will not happen again.
The CLP’s plans will increase prices, blackouts and job losses, because it is cutting the work Power and Water does. We are extremely concerned about the outcome of this bill, if it passes, which it will because the government has the numbers. We look again at the fundamental difference between how Labor and the CLP approach Power and Water.
We see it as an essential service and the CLP sees it as purely a profit-making entity. That is, essentially, why we oppose these bills, because they do nothing to allow Power and Water to continue as it should, providing utilities to people as an essential service. These bills are centred on the ideological belief Power and Water should be a profit-making entity, which will inevitably lead to its sale. This is something the Chief Minister will not rule in or out, and we cannot support these bills.
Mrs PRICE (Community Services): Madam Speaker, I support the three bills before the House. I do not do so lightly, as I am aware they are controversial and have brought disagreement from members of this House. These bills seek to allow Power and Water to compete in a competitive market place. Genuine competition breeds better prices; that is economics 101. I do not for one minute think this will happen overnight or even within the first 12 months. If we want to do it properly, we will need to build a solid foundation. These bills do that, providing a solid foundation for Power and Water to move on.
These bills strategically position Power and Water to create the right environment for competition in the Northern Territory power supply market. There has been some concern about the effect on Indigenous Essential Services, which is part of Power and Water. As the funding minister for IES through my Department of Community Services, the Treasurer assures me these changes will not have any impact on IES and its service delivery. The Public Accounts Committee has met and asked many questions, and we have heard the opposition ask questions about shortfalls in funds and privatisation. My Department of Community Services contracts IES to supply electricity, water and sewerage services to 72 remote Indigenous communities. IES is a not-for-profit subsidiary of the Power and Water Corporation, funded by an annual recurrent grant in the Northern Territory budget and by revenue raised from sales of services. The recurrent grant from 2013-14 was $71.3m, with expected revenue of $39m.
This is revenue from the sale of electricity, water and sewerage. The Department of Community Services funds the contract held with IES and the department. This is a three-year contract and was re-signed on 30 June 2013. The responsibility for the provision of IES is currently shared across three ministerial portfolios. With the new model for the structural separation of the Power and Water Corporation proposed by the Treasurer, there should be more centralised control over a business which delivers to the specific needs of remote communities. I suggest to the Treasurer that perhaps the responsibility for IES should only be with one minister.
Having IES stand as one of these separate entities will allow for a clearer and transparent cycle of revenue and expenditure. This leads me to address the usual scare tactics of the opposition and Independents; I ask why IES would be sold. Why would a private company want to take on board a business which is heavily subsidised by the Northern Territory government? The current IES model is that most customers pay for services through a prepayment method on power meters. Prepaid power cards are used on most public housing tenants’ meters. With revenue of around $40m in previous years, an expected $40m this financial year and a cost of $77m, why would this be attractive to a buyer?
It is my job as the only bush minister in the CLP government to oversee the future of remote communities.
Looking at proposed reforms from a strategic perspective, it removes red tape and better positions Power and Water to be competitive. It does not change how essential services are delivered in the bush, and will lead to a reduction in power prices. It is on this basis I support these bills.
Mr VOWLES (Johnston): Madam Speaker, I oppose this bill which is being rushed through the House without a skerrick of evidence from the government to show it is necessary, prudent or beneficial to Territorians.
I will concentrate my speech on two aspects of the legislation. Firstly, this bill has not had appropriate economic rigour applied to it. Secondly, this is nothing more than an ideological move by the CLP to prepare parts of Power and Water for sale. The Public Accounts Committee belled the cat last week on how irresponsible this legislation is.
Senior bureaucrats of NewCo and Treasury asked the obvious question as to whether the cost-benefit analysis has been done on the plan to split Power and Water. We all waited for the obvious reply, but it never came.
The answer should have been, ‘Yes, a cost-benefit analysis should be done on such a major shake-up of our most important utility’, but senior bureaucrat after senior bureaucrat confirmed our worst fears. The answer was no.
A cost-benefit analysis has not been done, by NewCo, Treasury or Power and Water. We have a ludicrous situation where our biggest and most vulnerable utility is being split up on a hunch it might be beneficial. This government has no idea whether or not it will be beneficial because the most basic body of work, a cost-benefit analysis, has not been done. Our members on the Public Accounts Committee could not believe their ears. How could it be possible that such an oversight occurred? I will venture some suggestions. Is it because this decision is being driven by CLP ideology, rather than sound economic judgement? Is it because this plan is being driven by the manic CLP desire to prepare the most profitable parts of Power and Water for sale? Is it because this government fears the answer a decent cost-benefit analysis might provide, that this whole exercise will cost tens of millions of dollars and benefit no one?
We know who will benefit. It will benefit whichever large corporation gets its hands on the most valuable and profitable parts of Power and Water. Territorians will be left with the unprofitable parts. There will be another cost; when parts of Power and Water are sold to the highest bidder, average Territorians will suffer. It is not me saying this; I quote the distinguished Professor of Economics of the University of Queensland, John Quiggin. He has undertaken the most comprehensive study of the history of power privatisation in Australia.
Professor Quiggin said:
Let me repeat, prices rise sharply and the outcome will be inferior to what we have today. We should be learning from failures in other Australian jurisdictions, not repeating them.
The Treasurer and Chief Minister will tell Territorians they have no plans to sell the profitable parts of Power and Water. Pull the other one, Treasurer, it plays jingle bells.
Proposed section 53 of the legislation shows how it will happen; the mere splitting of the Power and Water Corporation does not need proposed section 53 of this bill. If the Treasurer wants us to believe there is no privatisation agenda, he has a chance today to amend the legislation and remove proposed section 53, which I call the ‘privatisation clause’. Here is your chance, Treasurer. If there is no privatisation agenda, will you move to amend the legislation to get rid of the privatisation clause? There is only silence.
Of course you will not, because the plan is to split Power and Water into bite size chunks and flog the best bits to the big end of town. However, proposed section 53 is more than a privatisation clause, it is the Treasurer’s play thing. It allows privatisation at the stroke of the Treasurer’s pen without coming back into this Chamber with fresh legislation. That is right, if you get the numbers to ram this legislation through, big Dave Tollner can sell off the profitable parts of Power and Water without coming back to this Assembly for approval. It is scandalous.
We have consulted widely on the privatisation clause in this bill, the infamous proposed section 53, and I have heard the advice of an eminent senior counsel about it. In all of his years dealing with corporate law he had never seen anything like proposed section 53. It is bad legislation, and if it passes, it will be bad law. Allowing the Treasurer of the day to sell parts of the Power and Water Corporation by regulation rather than legislation sets a dangerous precedent. What will be next – TIO? During Question Time this morning the Chief Minister would not rule out selling TIO or the port. Treasurer, you should get rid of proposed section 53 today.
This is a sad day for the Territory. The CLP has proven, once again, it cannot be trusted. It cannot be trusted after it promised to lower the cost of living in the lead-up to the last election, and it cannot be trusted now. As sure as night follows day, parts of Power and Water will be sold if this legislation goes through. What will this mean for Territorians? The obvious one is rising power costs. The new member for Blain had his ‘not for sale’ and ‘no deal’ posters everywhere, and he would have heard, when doorknocking and meeting residents during the Blain campaign, that Power and Waters costs are hurting families. The cost of living has gone through the roof, Territorians are hurting, the people of Blain will be hurting, and they will hurt more if power prices go up. That is what we expect if this passes and the privatisation of parts of Power and Water go through, meaning higher prices for Territory families.
People are already leaving the Territory due to the high cost of living the CLP promised to cut. We have the highest inflation in the country at 3.6%, compared to the national average of 2.8%. The CLP went into the election in 2012 promising to lower the cost of living, and it is not doing that. The cost of living is going through the roof. If you privatise Power and Water and sell assets, power prices will go up, further hurting families. Families will have to decide whether they stay here or leave. What else will happen? Infrastructure investment will fall, more blackouts will occur, and the new owners of profitable parts of Power and Water will profit at the expense of Territorians. The Power and Water Corporation is too valuable an institution to Territorians to be ripped apart and disposed of to CLP mates. I strongly urge the Assembly to vote this legislation down.
Ms WALKER (Nhulunbuy): Madam Speaker, I also make it clear that the opposition does not support these bills and the split of Power and Water. We do not support changes to the Government Owned Corporations Act or the split up of publicly-owned assets, a thinly-veiled plan to sell off the assets of the Power and Water Corporation. As we know, amendments to the Government Owned Corporations Act will allow
this to occur.
I acknowledge the efforts of the member for Wanguri, as shadow minister for utilities, for her efforts throughout this saga since the CLP made its plans known. The member for Wanguri has challenged the CLP every step of the way, pursuing the matter through this parliament and the committee process. She has articulated the issues, exposed the smoke and mirrors of the CLP and stood up for Territorians who have not been consulted, not been told the truth and not been told what the cost of the split will be to them as taxpayers. They certainly have not been told what the benefits will be.
I also acknowledge the considerable efforts of the Opposition Leader in driving this debate, holding the CLP to account and exposing it for being less than honest with Territorians. She has exposed the CLP’s singular commitment to split and sell the Power and Water Corporation as nothing more than a cash grab, no doubt to meet all of its unfunded election promises in the bush.
Perhaps they have now given up on the bush. They seem to have lost interest in the bush, and the Chief Minister’s response to questions this morning from the Opposition Leader – he would not even rule out selling another government owned corporation, TIO. The agenda of this government is quite clear to everybody, and the CLP is taking Territorians for fools in telling us that splitting up and selling the Power and Water Corporation is a good thing. We are expected to suck it up, accept it and adopt a, ‘take it, we know what is best for you because we are the government’ attitude.
As a bush member I am particularly concerned about the implications of the split for my constituents. Those of us in the bush already have much reason to mistrust the CLP government because it has broken so many promises and back-flipped on so many commitments that any trust which might have been there has well and truly eroded. Like the rest of the Territory, people were told their jobs were safe, and far from reducing the cost of living, the CLP has driven it through the roof, much of it on the back of increasing Power and Water tariffs.
As the Opposition Leader said, average families are paying more than $2000 extra per year for electricity under the CLP. Further increases are inevitable when the government pursues its ideological agenda to split and sell Power and Water Corporation assets. These price hikes have hurt families, businesses and service providers, be they government or in the NGO sector, and have seen far too many Territorians struggle. People in the bush have been given second-rate service by this government, and none more so than those in our remote Indigenous communities, some of the most disadvantaged Territorians. On the matter of increased power tariffs, there was no formal or effective processing in place following the announcement in late 2012 that a 30% increase in tariffs would be in place from 1 January 2013.
As the Treasurer would be aware, many people in remote communities, and some of our urban communities in public and social housing, choose to pay their power bills using power tokens which come in denominations of $5, $10, $20 and $50. These slip into the household power meter to provide power.
The first people knew in January, those who are reliant on these power tokens, that power had gone up was when their lights went out, the fridges went off and the fans stopped turning because their power cards were not stretching over the number of days they were accustomed to. Consumption will vary, but I know constituents in my electorate at Yirrkala could expect to get a week out of a $20 power card. That is not being exorbitant with their consumption, far from it. It is not running air conditioning; it is running the basic household items and appliances, and doing so cautiously.
Where this power card for a family I am thinking of might have lasted a week, it now lasts three days if they are lucky, and possibly a bit less when it is very hot. Such was the increased demand for these power tokens come January last year that stores which sell them in our remote communities were running out. They too wondered why there was a rush on power cards, and it became a real issue for me at Yirrkala. I was contacted by a resident to ask if I knew the local store selling these cards had run out and there would be none on the way for a few days.
I contacted the store owner and found they had received no advice; the member for Katherine will dispute that, but he is wrong. He has been given wrong information; there were people who did not know the price of tariffs was going up, and therefore they should stock additional cards/tokens to look after people using them. Everybody relies upon electricity; we all need it, yet that advice had not gone out to residents and consumers of power, let alone stores selling those cards.
It was not just in my community; as I discovered, it was happening in many other remote communities. I phoned around to ALPA stores in northeast Arnhem Land. Yes, they had a similar demand on cards; they had put in extra orders and had run out. They knew residents in those communities had run out of power cards. The ALPA stores are good operators; they know how to look after their customers and are well run. The fact ALPA stores did not know they needed to stock up on additional cards is breathtaking.
Immediately after this saga, I also contacted GBMs, or GECs as they are now, and a number of them confirmed they had received no advance notice the power tariff increases were coming. It is not just power, but water and sewerage as well. This is the brochure, which I have waved around in parliament on a number of occasions, which went out to communities. I would dispute it with the member for Katherine, but it went out after the event for people who do not speak English as a first language. Your first look at this little brochure would tell you that perhaps there is a football carnival on down the road that weekend. In fact what it was about, if you are literate in English – it says, ‘Use less power and make your power card last longer’.
That is not the message people received when they picked it up. I understand that at one community in my electorate these were delayed because the printing had not been done. They had not been organised in time, and by the time they got there it was a little too late to be distributing them to people. I accept the intent in there that diagrammatically – perhaps this is helpful to people in trying to explain how they might reduce their power consumption. This should have gone out the day the announcement was made by the former Chief Minister that power prices were going up, not after the event when the horse had already bolted.
When this first occurred, at the hottest time of year, there were no fans, lights, washing machines – too bad if you needed to wash your kids’ clothes. There were no fridges, and with that, no food security. It is an appalling state of affairs, but that is the regard this government has for our remote Indigenous communities when it comes to the provision of an essential service, a necessity of life, and especially so in our tropical climate.
The next chapter in the sorry saga of the 30% increase to Power and Water Corporation tariffs saw Chief Minister Mills knifed in the back on 13 March last year. The new Chief Minister stepped up and declared the CLP, in his words, had been ‘hurting’ Territorians. He then promised to delay or spread out the pain of price hikes, which resulted in a rebate to consumers. It was a bit of a debacle to say the least. We know the Chief Minister even visited a Power and Water Corporation office, asking staff to tell him how he could work out his power bill and how the rebate or refund was working.
Here is an advertisement from the NT News on Tuesday 19 March which talks about revised power, water and sewerage tariffs. This did not appear in the weekly newspaper which comes out in my electorate; I do not know about Tennant Creek. There is nothing in there about how, if you are reliant on power tokens, your rebate would be calculated, given tokens were put in, meters were recalibrated and obviously not lasting as long.
I raised this with the utilities minister, the member for Katherine. It was a most unsatisfactory situation; what they decided to do in this debacle was credit $50 back on to the power meter of every household which had one. It did not matter whether you had a four-bedroom house which might have been home to 20 people, or a two-bedroom unit which may have had only a couple. Everybody received a $50 refund, irrespective of the size of the accommodation or how many people living there.
The government takes Indigenous people in remote communities for granted. They are out of sight and out of mind. They will not complain, they do not speak English and they do not necessarily listen to the ABC or receive the NT News. It is only when the likes of us go travelling around communities and talk with our constituents that we discover how hard done by they are.
Apart from the impost on residents with these hikes, residents and service providers have also been hit very hard in trying to meet operational costs with such massive increases. As the shadow minister for Local Government, I know there was an outcry from the local government sector. There continues to be an outcry in urban and remote areas about how much these costs have hurt.
The member for Namatjira knows only too well the MacDonnell shire looks after three swimming pools and communities in her electorate. This was a time of year when it was starting to get very hot down there in desert country, and these pools could not operate because they could not afford the power.
It took some time before it was resolved. With the change of government, the new Indigenous Affairs Minister, Senator Scullion, given he had campaigned in the bush and told people he would look after them, had no choice but to find the money for these pools to operate.
As recently as the last sittings the announcement was made that most municipal and bush local government councils would be responsible for maintaining Power and Water Corporation assets like street lighting. There was a huge outcry about that. There was a media release by mayor Abbott of Palmerston city council, quite rightly complaining long and loud about the imposition that would be on Palmerston city council, well over $500 000 to take on the maintenance of those assets. That translates to $52 on their annual rates, amounting to a 5% increase based on current figures. That might not sound like a great deal to some people, but it is.
City of Palmerston Mayor Ian Abbott, outraged at news of the new charge, said:
This came around the time of the massive blackout. It is not just us, Treasurer, who are talking about your plan to split Power and Water, with a view to selling it. As the mayor said in his media release:
To go back to matters in the bush, it is not just me or the opposition which see the betrayal in the bush. People in the bush see it, but as of today, three MLAs who walked out on the CLP have taken up seats around me on this side of the House, because of their considerable list of claims around the CLP’s failure to deliver in the bush, and they have spoken out against these bills today. I am very pleased to see these members speaking up on behalf of their constituents.
The Treasurer has brushed away the issue of arrangements under community service obligations – CSOs. He was asked by the member for Wanguri in Question Time this morning where the additional $5m to $6m will come from annually. We all want to know where the even bigger sums will come from to meet the cost of repairs, maintenance and upgrades. When SIHIP was under way on Elcho Island at Galiwinku, 70 or so houses were built a few years ago. I cannot remember the figures with some accuracy, but one half of the cost of delivering SIHIP at Galiwinku was associated with the upgrade of Power and Water infrastructure. These communities have been there a long time, with ageing assets and infrastructure, and they continue to grow. People are having children and want to remain on country; they need more houses. We build them more houses and you must, in turn, upgrade utilities infrastructure in remote communities.
Where is the CLP planning for this sort of infrastructure? What negotiations is it holding with its federal counterparts about how, into the future, it can look after assets and improve those associated with utilities across our remote communities?
I note the Treasurer’s reference to alternative energy, the cost of diesel, not to mention, whilst they are climate change deniers, the pollution which comes with burning diesel. That is why, under the former federal and Territory Labor governments, there was significant investment in solar energy and bush lights. All around my electorate I see bush lights technology on homelands. Most recently, the community of Rorruwuy installed bush lights. It works incredibly effectively for those communities. A number of the Laynhapuy and Marthakal homelands have them, and I understand that right at the top of Elcho Island, a beautiful little homeland called Gawa is next on the list to receive solar energy to power up the community. They welcome it, I welcome it, and if this is the path the Treasurer is going down then all power to him.
Power, water and sewerage services are essential. They are critical, especially in remote communities where people who live there are amongst our most disadvantaged Territorians. They already have a higher cost of living than Darwin by virtue of living remotely where everything has to be shipped, flown or barged out. We know the price of a basket of groceries in a remote community is significantly higher; these are not luxury items, they are basic food items.
Speaking of the Stuart Highway, the member for Stuart is now, as she pointed out, just one of two bush members in CLP ranks and the only bush member in Cabinet. She talked about her role as Community Services minister. Is she satisfied that constituents in her electorate are happy with the way things are going under Power and Water?
I listened to her talk about Indigenous Essential Services, and she said there would be no impact. She said that under these three bills and the arrangement to split the Power and Water Corporation there would be no impact on IES. She talked about how sensible these bills are; she said it is economics 101. Member for Stuart, I do not concur with you about economics 101. How can you say that when we know there have been no costings produced around this, no plans revealed about what cost benefits will be and what it will cost to split up these three entities of the Power and Water Corporation? However, I got a sense you were putting your side on notice when you said you were supporting this bill on the strength there would be no impact on IES. I hope you are right, member for Stuart, but you have given yourself an out for when the day comes and you discover it is not all rosy with the split, and people in remote communities are indeed affected.
It is extraordinary we are debating these bills without thorough and rigorous consultation with Territorians and without any analysis of what this will cost, which inefficiencies it will address and what benefits it will bring. We know the government was dragged screaming to a very brief public hearing and inquiry into plans to split the Power and Water Corporation. That hearing was held last week, where we know – because we saw and heard them – witnesses confirmed during questioning that a cost-benefit analysis had not been undertaken. That is frightening for people, with such a significant reform the CLP is trying to put in place.
There are many facets to this debate. On May Day I very proudly marched with members of the ETU for a few reasons, one of them being that it was in memory of a very dear friend of mine who was a staunch member of that union. Good Friday was the first anniversary of his passing. He worked tirelessly for years to uphold and fight for the rights of workers to ensure a safe workplace and conditions of employment and, as a sparky, he was keen to work with employers to help them understand power generation, and that it is an essential service, not a luxury.
He knew only too well, living in the Northern Territory for so many years, that with a low population base, a huge geographic area and areas of disadvantage, making money out of Power and Water, an essential service, is just about impossible. It is a service, not a business.
I talk about the May Day march and the ETU because it reminds me about the jobs of those in the Power and Water Corporation in the event of this split and a sale. What about these hard-working public servants, whether they be in an administrative or trades capacity, and the apprentices they take on?
What consultation has there been with people who work there? Has there been any consultation about these proposed changes and how they might impact on their working lives and, in turn, their families? No, of course there has not from this government we know. This is from a government which, prior to the 2012 election, said, ‘Your job is safe’, something enshrined in this widely circulated selfie by the member for Port Darwin, who is and has been the Minister for Public Employment since the election. He was the first to wield the axe on hundreds of public service jobs, having gone to an election saying, ‘Your jobs are safe’.
Seeing this photo in my office – I keep this one close by to remind me of why I am here, what I am working for when I return to Darwin for these sittings – reminded me of another photo. It is this one, handsome fellow that you are, member for Blain. It is the member for Blain in a poster like this for the Blain by-election, under the banner ‘Power Water Corporation – No Sale’.
Welcome to you on your first day in the House, member for Blain. Welcome to the world of dirty politics, sitting as you are, member for Blain, in the CLP government. I hope you do not live to regret that photograph.
I know you are a good person with good intentions; I enjoyed your maiden speech this morning with those words around honesty, integrity and humility. I genuinely believe you possess them and you have come into this House to do good things for the people of the Northern Territory and your electorate. However, I will keep that photograph close by. If I am disappointed or not disappointed, if I find out it is not for sale, will that not be a wonderful thing? I will be keeping this very close by – along with the wonderful photograph of the member for Port Darwin – to remind myself of the promises the CLP make to people and those promises it backflips on.
We will be watching this debate very closely. We might be in for a late night tonight, but I reiterate, we, on this side of the House, representing so many disgruntled Territorians, do not support this bill.
Ms ANDERSON (Namatjira): Madam Speaker, I will ask questions of the Treasurer and shareholding minister to outline, through the committee stage, some of the issues raised. These have been raised by the Labor side as well as my colleagues, the members for Arnhem and Arafura. The problem we have with the separation is that at the PAC stage, it was not given enough time; there was only one meeting. How can there have been investigations into what is good and what is bad, based on one meeting?
The Country Liberal Party came out very early in its election campaign to say it would be a government of transparency and honesty for Territorians. It was about telling Territorians the truth, and as bush members we have concerns. Hansard shows a $6m shortfall. Those are some of the questions we need answered during the committee stage. We need to go back to our constituents and let them and other Territorians know what is really happening. You know the cost of living in the remote bush and that people struggle. As the member for Nhulunbuy said, power tickets are costing more. It is costing more for people to put the cards in; instead of getting a $50 card to last four days, it is now lasting two.
There are more and more people making fires on the verandah. They are cooking outside because they cannot afford the $20 or $50 tickets anymore. Once upon a time you could buy a $10 or $15 ticket and that would give you enough electricity to run your house overnight. People are really struggling. In remote Aboriginal communities there is overcrowding. You have up to 27 people living in a house.
Those are some of the questions we need answered. Why, Deputy Chief Minister, was there only one inquiry, instead of allowing the PAC to investigate further on behalf of Territorians to see what benefits they would have as a result of the breakup, and so there is honesty and transparency in what the government is doing? It is not just the remote bush; it is ordinary Territorians in your electorates as well, in the northern suburbs of Darwin, who are finding it very hard with the cost of living. Food prices are really high now, as well as electricity bills; we need to make sure the doubt in these people’s minds is answered. People are talking to us to ask these questions.
It is in the best interest of governing for the future that some of these questions be answered. It is hard to support the government if at the PAC stage it could not even allow an inquiry to go through its proper process of investigation to see whether the split will be good for Territorians.
What is the impact on remote Aboriginal communities? Why, at the PAC stage, was the $6m mentioned? There is a shortfall of $6m, Treasurer, and those are the questions people want answered. They are not just my constituents, but yours in the northern suburbs as well. If we are talking about honesty and transparency, and moving the government forward, those are some of the questions you need to answer. When you look through these bills and see regulations to allow your signature to change anything, it puts a doubt in people’s minds and they think there is a different aspect to this legislation. The fact that you will have the right, even after the committee stage tonight and the passing of these bills, to change things at your whim is frightening.
We will be listening to the debate between you, the opposition and the Independent member at committee stage because we want to hear these questions answered. Yes, the bush is struggling. Remote Aboriginal communities are struggling with the price hikes and power ticket prices are getting higher.
We need to make sure we look after all Territorians when we look at social and economic opportunities. We are all Territorians, and it is about moving forward. Indigenous people own more than 50% of the Territory’s land mass; we can call another 48% under native title, which is pastoral land. That makes us key players and stakeholders in the Territory. We want to be heard, seen and consulted fairly and justly in the future direction of the Northern Territory and what is happening here.
Northern development mostly happens on Aboriginal and pastoral land. That is why we feel, as Indigenous people, that our land council should be supported. Our land councils should be key stakeholders in any kind of opportunities you have with building the north or economic opportunities in the remote bush. It is our job, as members of parliament, to ask questions on behalf of our constituents and Territorians to make sure we highlight the failures of government to them.
I would appreciate, Deputy Chief Minister, if you could answer some of these questions during the committee stage. We can take your answers back to our constituents and tell them what you have said about there being no impact on power charges in the remote bush and that prices will not go up, so people do not have to be frightened about what is coming, because they can see it.
We need to be open and transparent. We have always said that when we come into parliament it is about openness and transparency. It is about being honest with Territorians and making sure we take all Territorians forward in any kind of policy development and rules we make.
Through our debates we can engage and identify if there are misconceptions in the things we say to you. I would like you to highlight the things we are talking about and the questions we are asking so it gives us the chance, as local members, to go back out bush and tell our constituents.
Mr TOLLNER (Treasurer): Madam Speaker, I thank everybody who has spoken on this bill tonight; I have enjoyed listening to the comments made. It is fair to say there are a number of people in this Chamber who are quite ignorant of what has been going on in Australia in the last two decades in relation to changes to our utilities.
A few weeks ago I circulated this booklet to members of parliament to give them an understanding of what is going on. For those people who cannot see, it is the National Electricity Market: a case study in successful microeconomic reform, which is put together by the AEMC and KPMG. It is a fantastic assessment of how National Electricity Market reforms have been undertaken in this country.
I have heard a range of arguments this afternoon, the biggest one probably being to do with the cost-benefit analysis. If anyone had looked at this booklet, they would notice it is a cost-benefit analysis. This has now been occurring for almost 20 years in Australia. Whilst we might lament the Northern Territory as the last jurisdiction and that we come in way too late, we now have evidence from all states and territories around Australia as to how this microeconomic reform needs to take place.
We have case studies and all the analysis. This has been a big issue across the country, and we have some good people involved in putting these reforms together. I have full confidence in the people who have been working diligently behind the scenes to make sure the Northern Territory gets it right.
A couple of weeks ago I had a telephone conversation with Shane Stone, the former Chief Minister of the Northern Territory. These days he is, apart from having range of other duties, a board member and I think Chair of Energex in Queensland. Mr Stone said, ‘Look, Dave, I take my hat off to you for what you are doing in the Northern Territory. It is a tough call, but it certainly needs to be done. This is one of the most complex industries I have ever been involved in.’ He said his position at Energex has opened his eyes to the utilities sector. He then made a very interesting comment, saying, ‘If I had my time as Chief Minister again, knowing what I know now, I would certainly be heading down the same path you are heading down’. He told me it is far too late to be doing this in the Northern Territory now and that it should have happened years ago. He also said, ‘If I had paid more attention I would have done more to introduce competition into the electricity market in the Northern Territory, but at the time Power and Water was out of sight, out of mind’. It was not one of the top of mind issues of the day and, consequently, when he was Chief Minister, the government did not really pay attention to it.
That is an excuse as to why a number of governments did not do anything at all. However, in the early 2000s the Northern Territory government received a $60m lesson in why these market reforms are necessary. At the time we saw the Power and Water Corporation, ably assisted by the government, freeze out NT Power and not let it generate and connect into our grid. NT Power successfully sued the Northern Territory government for in excess of $60m for not allowing it to compete in the Territory marketplace. One would have assumed at that stage the then Labor government would have snapped into reality and said, ‘We are bound to do this, we should get on board and do it’.
It did not happen; we had our current Opposition Leader, as the Treasurer and Shareholding minister of the Power and Water Corporation, and that is when things went pear shaped. At least Syd Stirling kept an eye on the Power and Water Corporation, but as soon as the member for Karama took on the job as shareholding minister things started to spiral downwards in a big way very quickly. We saw debt within the corporation go from about $200m around 2009 to about $1.1bn when we took over government. There were more than 200 employees put on and no change in service at all. It was interesting to see the investigation the Utilities Commission undertook after the most recent system black in March. For that investigation the Utilities Commission employed the Australian Electricity Market Operator and a large international consulting firm called Evans and Peck, and the alarming things which turned up in their report belled the cat about the way the former Treasurer handled the Power and Water Corporation. They noted that following the investigation into the previous system black in 2010, no recommendations were implemented.
It is hilarious when the opposition and the ETU say, ‘Oh, no, that is all your fault because you sacked the board and the managing director in 2013’. That was three years after the investigation and report, nothing had been implemented, but it was mine and John Baskerville’s fault these things had not been done. Poor old Baskey, only getting to warm the chair, had a catastrophic system black and all of a sudden it is his fault.
It is nothing to do with the fact hundreds of millions have been created in debt, hundreds of millions in taxpayer subsidies have been poured in, hundreds of new employees have been added, but no recommendations were implemented. It is alarming; what is even more alarming is the way the Opposition Leader treats people like John Baskerville. I am looking at a transcript of an interview with the Opposition Leader by Pete Davies on 17 April. What the Opposition Leader had to say was a slur on John Baskerville. She went on about him not being up to the job, saying he knows nothing about Power and Water and that he is a sort of middle manager. It is alarming the way the Opposition Leader would talk about somebody who is aware of some serious problems within the organisation he fronts.
Someone gave me an analogy the other day. You take your car to a mechanic to have the brakes fixed. You pick the car up after having the brakes fixed, drive it away and have an accident because, lo and behold, there are no brakes. There is an investigation to look into why the car did not stop, and the next mechanic you go to says you had a crash because your brakes were not fixed. Who do you blame? Do you blame the guy who told you your brakes were not fixed or the bloke who was supposed to fix the brakes in the first place?
Typical of Labor, it does not care who it demeans in its quest to muddy the waters and strike fear into people’s hearts, but it blames Mr Baskerville. After 11 years in government and complete control of the Power and Water Corporation, it is now somehow Mr Baskerville’s fault this system black occurred. It is appalling. I have listened to this debate and the Opposition Leader target the former Under Treasurer and Utilities Commissioner, Alan Tregilgas, one of the most respected men in the industry in Australia, saying he somehow lied to her. She said she took notes and he said something which was not how she recorded it, therefore he is a liar. It is appalling the Opposition Leader would stoop to such tactics and muckraking of the worst kind, but that is her poisonous nature. She does not care who she hurts along the way in her quest to scare the daylights out of Territorians. It has been an interesting debate in which I have heard a number of things. The member for Casuarina said he is scared competitors will come in; I think he used the words ‘cherry pick’ customers, the big business customers on cost reflective prices.
Prior to coming into parliament I spent a bit of time in sales. I sold all sorts of things and there was an old adage in the sales industry: ‘it is a lot easier to retain a customer than it is to steal a customer from somebody else’. The idea was you looked after your current customer base, they would be kept happy and if you took your eye from them they would be easy to steal. Those tranche one, big customers are all on cost reflective pricing. Is it not the whole idea of competition to try to achieve lower costs? If a generation company turns up here and can offer a better deal than the Power and Water generation business, a business will not naturally go to the new generator. That is the whole idea of competition. If the Power and Water Corporation or the new generation business wants to retain those customers, they may have to sharpen their pencils and find a cheaper way of delivering better electricity services to those big customers. That is exactly the aim of this legislation, to encourage competition.
I heard the member for Nelson say no one has pointed out where there are any inefficiencies in the system. I ask him to look at the Utilities Commission report into the network price determination, because in the network price determination the Utilities Commission reveals the network is 27% less efficient than a comparable network somewhere else. If the network is running inefficiently, who is to say the generation, retail or water and sewerage businesses are not running inefficiently? At the moment it is all one company and what is inefficient in networks will be inefficient in generation and retail. It will be inefficient across the board, and that is what we are trying to rectify by introducing competition.
A range of other things have come up again, with the Independents from remote areas concerned about Indigenous Essential Services. I reassure them again that these changes will have nothing to do with Indigenous Essential Services, and it will not change things there. I do understand the member for Nhulunbuy’s concerns about power supplies in remote communities, and she has said it is not good enough when somebody’s power goes out or the price goes up. I remind the member for Nhulunbuy that taxpayers are subsidising those bush households to the tune of around $8500 a year. It is hardly the action of an uncaring government. This is a government which believes in the uniform tariff. People living in remote communities should not be penalised for living in remote communities, and we are prepared to subsidise their tariffs. To suggest $8500 a year per household is not good enough, I would like to hear from the member for Nhulunbuy as to what figure she thinks we should be subsidising bush households to. That would be an interesting scenario.
The member for Wanguri needs to understand that prices are fixed. They are set and regulated by government. They will not change after these changes. What may change, if there are extra costs in the system, is the subsidy provided to the corporation.
I find it ludicrous that Labor is concerned about subsidies and what we spend on them. This is the same organisation which saw the Northern Territory heading towards a $5.5bn debt, with a budget deficit of over $1bn this year, allowed Power and Water to borrow another $900m, with another $500m in borrowings yet to come and which saw the organisation put on an extra 200 employees with no change in service. Labor is now saying it is concerned about taxpayer subsidies which might have to prop up these new organisations. That will not be the case.
These organisations, whilst they may initially cost some money to set up, which is only fair to see them established – the whole idea about structural separation is to allow market competition to see efficiencies in the system, as well as accountability and transparency of where taxpayers money goes; it is currently very difficult to do that with the Power and Water Corporation. There is no accounting separation within the relative services it provides. We are trying to make the system much more transparent, accountable and efficient. Ultimately, Territorians are the ones who pay, one way or the other.
We must reduce the amount of subsidies going into an organisation which could be much more efficient, because they should be going into other areas. Things like roads, schools and hospitals could use a lot of that money. If we can make the Power and Water Corporation and others in the sector much more efficient we would free up money for government to spend in other critical areas such as health, education and roads.
Mr Wood: That is the argument for privatisation.
Mr TOLLNER: There has been a couple of interesting arguments. I heard the member for Barkly say monopolies are worth more money and people will pay a hell of a lot more for a monopoly. That is probably true. If we were to privatise it, why would we not sell the whole thing as a monopoly rather than splitting it up?
Privatisation is an interesting red herring being thrown around everywhere. I will mention an organisation called Australia Post, which has existed since the 1970s. Prior to Australia Post it was called the Postmaster-General. The PMG was responsible for all postage, plus telecommunications. Sometime in the 1970s the federal government decided to structurally separate the PMG, creating Australia Post and, at the time, Telecom. Telecom was later corporatised and became Telstra, and was then sold. Now in Australia we have a situation with several thousand competitors in the telecommunications market, but back in the day of the PMG there was only one, and it was the PMG. No company would get into that. It was government which had to pave the way and create many of the networks around Australia before competitors started to join the marketplace, but that has happened.
There was the eventual sale of Telstra, which we all know happened under the Keating government and was carried on by Howard and others. Telstra is now a fully privatised company, but on the other side of the coin, Australia Post, is still, to my knowledge, 100% government. Admittedly there are small franchises where people buy the right to sell stamps and provide other Australia Post services, but it is still 100% Australian government owned. That was some 40-odd years ago and we have still not seen the privatisation of Australia Post. However, it is a much different organisation to 40 years ago.
My point is that structurally separating something does not necessarily mean you will go down the path of privatisation. I understand it is easy to raise concerns that people have about privatisation. I was sitting in a Treasurers’ meeting a couple of weeks ago with Joe Hockey, where he informed us of the federal government’s plan to provide incentives for states wanting to privatise. His point, which I think is well known, is that it is very difficult for states, federal governments or anyone to privatise assets. He knows it will be a barney and there will be trouble. As part of a federal government he assured all Treasurers in the room, ‘I am prepared to get behind you, guys, and give you whatever support you need. These things take a lot of effort to do but, ultimately, the renewal of infrastructure is an important national goal and we need to work through these things.’
I noticed the Chief Minister signed up to those reforms at the COAG meeting, and it is good policy. It will be difficult for jurisdictions to privatise assets, as it always is, but whilst we are looking at it in the Northern Territory, we have never said we will privatise any aspects of the Power and Water Corporation. That is off the table.
In the last few minutes I have to wind up, I will put on the public record my thanks to a couple of people. Firstly, I personally thank Alan Tregilgas, a former Under Treasurer and Utilities Commissioner who has provided fantastic advice and been great to work with. I was reading this National Electricity Market case study at Christmas on the way home from holidays; I had a couple of hours sitting in a plane and read it from cover to cover. It dawned on me that Alan Tregilgas was taking us down exactly the right path; his expert and technical knowledge was second to none and it was the right thing to do. Mr Tregilgas, I thank you from the bottom of my heart and I am sure future generations of Territorians, if these reforms get up, will also thank you for your contribution as well.
There are a couple of other people to thank, and one who has been particularly tireless is the Managing Director of the Power and Water Corporation, Mr John Baskerville. He has done an exemplary job. He has been ridiculed and targeted by members in this Chamber, but the job he has done under very difficult and trying circumstances has been first class. He has kept the lights on. It is not an easy reform to undertake. Whilst I say it is all a bit ho-hum and it has happened everywhere in the country, change is never easy and John Baskerville has done a wonderful job in steering the ship which is the Power and Water Corporation, and there is still a lot more to do. The other person is my good
friend Craig Graham, the Assistant Under Treasurer, and his advice is always excellent.
Having said that, I will not let the three of them off the hook; there is still a pile of work to be done and I sincerely hope they will be with us for some time yet. They have done the Territory a great service with the work they have done. I commend this bill to the House.
Motion agreed to; bill read a second time.
In committee:
Mr WOOD: We would like to ask some questions on the second reading speech because it is a very important part of this bill. I have some questions, but I will do it properly, so the shadow minister should ask hers first. If you have any questions on the second reading speech, you can start and I will jump in where necessary.
Ms MANISON: I will cut to the chase, minister, given many questions were raised about part 5A and proposed section 53A. What would you define as assets with the government owned corporation?
Mr TOLLNER: An asset includes a legal equitable interest of any kind in property of any kind and a chose in action or other right.
Ms MANISON: Could you drill down a bit further from that, minister? Would that include things like generators, power stations, customer groups and people?
Mr TOLLNER: Yes, for a bit of clarification, it is physical assets which are on the balance sheet, rather than customers.
Ms MANISON: Thank you. Going to definitions around relevant entities, we know what a government owned corporation is. Can you give me an example of what a subsidiary is in this legislation?
Mr TOLLNER: Indigenous Essential Services would be a subsidiary.
Ms MANISON: What would a statutory corporation be? Could you provide a definition around that and the purpose of that being classified as an entity under this legislation?
Mr TOLLNER: A statutory corporation would be any corporation established by a piece of legislation.
Ms MANISON: Could you give definitions around a corporation or a body corporate that we have within the legislation, and examples of that and how they would be used under this legislation?
Mr TOLLNER: Yes, Indigenous Essential Services is a proprietary limited company, so it would fit into that category.
Ms MANISON: Within your definitions of a subsidiary, a statutory corporation, a corporation, a body corporate – why is there a requirement within this legislation to have all of those entity definitions, given you are saying the purpose of this part of the legislation is to allow the transfer of assets and liabilities between government owned corporations?
Mr TOLLNER: It is to give us the flexibility we may need in the event of setting up of new corporations.
Ms MANISON: As it stands in this legislation with your definitions of all the entities, do all of them have to be owned by the Northern Territory?
Mr TOLLNER: As subsidiaries, (a), (c) and (d) would be owned by either A, C or D. By that, you would say a subsidiary would have to be a subsidiary of a corporation owned by the Northern Territory.
Ms MANISON: Going back to the definition around corporations, what is the full definition of a corporation as defined by the Corporations Act 2001?
Mr TOLLNER: There are companies governed by corporation law which are defined by that act; it is federal government legislation.
Ms MANISON: It does strike me as being quite broad, especially in how (d) is written within the legislation. You can read it two ways. You can read it as being a corporation, as defined by the Corporations Act 2001, full stop, and you go on to say the body corporate which is owned by the Territory. That is fairly loose in its language and definition. Would you agree with that, minister?
Mr TOLLNER: Yes, I think the defining part of proposed section 53A(d) is the last bit of the sentence:
It must be a corporation owned by the Territory.
Ms MANISON: Do you feel confident that definition is rock solid in the legislation, and that it could not be tested?
Mr TOLLNER: The advice I have is that it is rock solid.
Ms MANISON: The definition of a corporation is amended in the Corporations Act 2001. Will that amendment automatically be picked up by the definition of relevant entity in this bill?
Mr TOLLNER: Yes.
Ms MANISON: Going back to definitions, how does the Commonwealth’s Corporations Act 2001 define a corporation as it stands in proposed section 53A(d)?
Mr TOLLNER: I do not have a copy of the Corporations Act with me at the moment, but maybe you could Google it and have a look yourself.
Ms MANISON: It is an important question, minister, so …
Mr WOOD: Can I tag on to that question? Minister, you have said you need these additions to that section of the act, but in both your second reading speech and explanatory notes there is no explanation as to why you need them. In fact, your second reading speech says, and I think the member for Wanguri said this as well:
The explanatory notes say pretty much the same thing; they also say that was the reason for this change. There was no explanation as to why you need (b), (c), (d) and (e), and that makes this a bit suspicious. All that you said at the beginning of your second reading speech is that you need to transfer assets from one government owned corporation to another, so you can see why people are a bit worried about what else is in there.
Mr TOLLNER: The easiest explanation I can give you is the legal advice provided to me, which says:
Mr WOOD: One of the problems was that we have never had an explanation. We had a second reading speech which does not explain it, we have had PAC meetings which have not explained it, and I think that is the first time we have heard an explanation which comes somewhere close to what we would expect.
Mr TOLLNER: The Attorney-General has been very good and Googled the Corporations Act. For the benefit of the member of Wanguri, I might give her the meaning of a corporation:
I hope that provides a good explanation.
Mr ELFERINK: By definition, a corporation is soulless.
Ms MANISON: Going back to the relevant entity definition, if you truly wanted to reduce the fear people have about what will happen to Power and Water Corporation assets beyond this structural separation, why can you not proceed with this legislation having the definition of a relevant entity as a government owned corporation? Why do you need to have other definitions?
Mr TOLLNER: I am not the one creating fear about this; that is other people in this place. We have been upfront in saying we are not privatising any aspects of the Power and Water Corporation.
Mr WOOD: I heard your definition, and this might be an unusual question, but when you were giving an explanation – can the government have a body corporate? I tried to Google it last night, but I am not as good at Googling as the member for Port Darwin. Is a body corporate only a private company?
Mr TOLLNER: We cannot think of an instance where that is the case, but I have been advised it is drafted to be as broad as possible to allow whatever flexibility is required to ensure we achieve a proper structural separation.
Ms LAWRIE: If the drafting is as broad as possible to allow any scenario, as you have just said, it allows the sale of all or some assets to a corporation. You said it is as broad as possible.
Mr TOLLNER: No, it is only a transfer.
Ms LAWRIE: Can you categorically rule out that this provision does not allow you, as shareholding minister, to sell all or some of the assets to a corporation?
Mr TOLLNER: Absolutely.
Ms LAWRIE: It is just a transfer within government-owned relevant entities?
Mr TOLLNER: It is within government ownership. Any sale of any corporation would have to come, by virtue of this legislation, into parliament for debate. The government has been very clear in saying we are not selling the Power and Water Corporation or any of the new entities being created.
Ms LAWRIE: Have you received legal advice to that effect, Treasurer?
Mr TOLLNER: I do not need legal advice to that effect. I sit in Cabinet and it has been very upfront in telling people we are not selling any aspect of Power and Water.
Ms LAWRIE: You are providing us with advice that a sale of assets, or some assets, would need to come back to parliament. The provisions here, as broad as they are, in your own description, with the advice you have provided on what corporations are under the 2001 Commonwealth legislation – do you have legal advice, to satisfy parliament, which could back up the advice you are providing during the committee stage? This could be provided either today or at a later stage.
Mr TOLLNER: As I said, we have made a decision that we are not selling Power and Water. We do not need legal advice to say that; it is like me asking you if you will provide legal advice that you are not going to the moon this weekend.
Ms MANISON: With regard to a government owned corporation, after it transfers assets to a subsidiary, a statutory corporation, a corporation as defined by the Corporations Act, a body corporate, etcetera, how much control does government have over what happens to those assets? Within this legislation, what control is there to stop, for example, a sale from the new entities they are transferred over to?
Mr TOLLNER: There is a division of responsibility here. The government will obviously be the corporation shareholder. The board and managing directors of the new corporation will have the ability to buy and sell assets, but they will not have the ability to sell the company. If they have an old car they might choose to sell it. If they have a piece of equipment which is run down and no longer of use to them they may choose to sell it. They may well choose to buy another car or another piece of equipment. That is the domain of the managing director and the board. It is not something the shareholding minister would typically be involved in, but a sale of the corporation itself would have to come to parliament for discussion.
Ms LAWRIE: Based on that answer, could the board overseeing generation assets make the decision to sell some generation assets without needing to come back to parliament?
Mr TOLLNER: If you want legal advice which says as shareholding minister I cannot allow the unfettered sale of any GOC, it will be easy to come by. I would have thought that was obvious; I will not be going out tomorrow selling businesses on behalf of government.
Ms LAWRIE: That was a response to an earlier question where we were seeking any legal advice you had, and you, in short, said you would not be providing any, with a reference to travelling to the moon as well. My question was, in the scenario you just provided in your response, could GenCorp sell generation assets without having to bring it to parliament?
Mr TOLLNER: The Power and Water Corporation currently does exactly that. Do you think it is appropriate or are you trying to assert that the Generation Corporation should have to come to parliament every time it wants to sell an old generator or buy a new one?
Ms LAWRIE: Under the scenario and powers provided in this legislation, could the Generation Corporation sell new generators at Weddell?
Mr TOLLNER: If under the Government Owned Corporations Act, it would require the approval of the Treasurer if the sale was over a certain threshold.
Ms LAWRIE: Could you provide parliament with that threshold?
Mr TOLLNER: We will get that for you.
Mr CHAIR: While we are getting that information, I will say that at some point we have to come back to clauses. We should be doing these in sequence; I am allowing you some general questions. We are in clause 20 at the moment, and I will go back to the beginning so we can work our way through because the standing orders say we cannot go backwards. I will do that in a moment, if that is all right, member for Nelson?
Mr WOOD: Yes. To clarify – I should not use the word ‘manipulate’ to refer to the discussion – but the section we are talking about is clearly in the second reading speech.
Mr CHAIR: That is okay, and is why I am allowing it to go ahead. We are still waiting on the Treasurer to give us an answer.
Is there an answer on that, Treasurer, or …
Mr TOLLNER: Yes.
Mr CHAIR: Does someone else want to ask another question?
Ms LAWRIE: I have a process question on the issue of the threshold in the scenario where the GenCorp board decides it will sell generation assets, generators at Weddell for example, once we find out what the threshold is. If it is above the threshold it must seek the shareholding minister’s approval. Do you have to take that to Cabinet for approval, or, as shareholding minister, can you alone sign off on it? The second part of that question is what are the requirements for you to report that sale to parliament or the public reporting of the sale, and in what time frame?
Mr TOLLNER: I am not required to do that. I am informed that is part of my responsibility as a minister, but having said that, I am aware that we do things like gas sales. Generally, if they are of a size and nature I would take them to Cabinet, but under the letter of the law I am informed that as shareholding minister and Treasurer I have that authority.
Ms LAWRIE: With the authority resting with you as shareholding minister, the subsequent question I have is what is the requirement for reporting the sale of significant assets, without yet knowing the answer to the threshold? We are talking above threshold here, not below, where the board makes those decisions. Above threshold decisions come to you as shareholding minister. We have just heard you do not have to take that to Cabinet and that it is your decision and yours alone. What process occurs in reporting those decisions you sign off on as shareholding minister? Is it the tabling of that information, is it reported in the Statement of Corporate Intent, is it an annual report? How is the Territory informed by you, as shareholding minister, that you have signed off on a divestment of assets above the threshold?
Mr TOLLNER: I suggest that would be done on a case by case basis. The reason I say that, and I will get some clarification on this in a minute, is that some asset sales will be commercial-in-confidence. I am sure, Opposition Leader, you will be aware, for instance, if the Power and Water Corporation was to sell gas, those things do generally remain commercial-in-confidence.
Ms LAWRIE: The price, not the sale.
Mr TOLLNER: The price, yes, but if you know the quantity and global price being paid, one will see the income you are getting from it. It is not too hard to work your way back to the price per petajoule. I suggest there would be some flexibility around that, given the commercial-in-confidence nature of some sales.
I am just informed you will find the threshold under section 38 of the Government Owned Corporations Act. Part 2A says:
Why is QEnergy already in the market if it is not attractive at present?
Mr TOLLNER: QEnergy is in the market. It was in the market under the previous Labor government. It retailed this building, so is already here.
Mr WOOD: What is the problem? It is already here, so what needs to be done? Why was it attracted here initially? Has it been an uncompetitive market? Companies are saying Power and Water is not transparent. There is a perception it is cross-subsidising and that is why we are making changes. If nobody was in the business already, perhaps I would agree with you, but QEnergy is already here. Has this been a stumbling block, the issue of Power and Water not being transparent, having vertical and horizontal dimensions? Why is QEnergy here in the first place?
Mr TOLLNER: QEnergy only has a handful of customers here. It would like to get more and cannot understand why it cannot. Where we want to see competition, if possible, is in the area of generation. The concerns competitors have, including QEnergy, are that it is very difficult to compete with a monopoly style business because it has an ability to move costs within the organisation. I wanted to mention employee numbers in each division of PWC, which the member for Wanguri read out, in my summing up speech, but I forgot about it. She set them in stone, but you can never set these things in stone because they are so fluid. People move between one part of the corporation and another very regularly; it is that change of where resources go which allows an uneven playing field when it comes to the marketplace.
Mr WOOD: I will get back to that a little later, but we have two companies looking at the market. QEnergy has told us it services business, as does Northern Power. I understand Northern Power is not interested in households and neither is QEnergy. The first question refers to your statement about competitive electricity services for Territorians. What benefit is this to normal Territorians? What benefit will there be to householders in the Northern Territory, even small businesses, if the only companies competing in this market are taking major power users away from the Power and Water Corporation?
Mr TOLLNER: The point you make is a good one. A large part of the marketplace is currently non-contestable, that is, other players cannot get in there. That is largely to do with how the CSO is delivered. There are ways of changing that which allow people to compete for households. One of our members, it might have been the Attorney-General, said that in states and territories around Australia which have done this, between 55% and 80% of households are on non-regulated tariffs; they received a better deal by going to a competitor in the marketplace. It would be wonderful to get to that situation.
The point you make about the big end of town, saying it allows retailers and generators to cherry pick Power and Water’s customers, is true. The big end of town is paying cost reflective prices. There is no subsidy for them and, ultimately, they are the ones which are contestable. QEnergy got the retail deal on this building we are in because the Legislative Assembly is a contestable customer. The point I made in my summing up was about an old adage I knew after spending many years in sales. ‘It is far easier to keep an existing customer than it is to try to attract a new one.’ The competitive advantage is with the Power and Water Corporation or the newly created GOCs, but if they do not become more competitive they may lose that business to other generators or retailers who are more competitive. That is, in many ways, the whole point of this legislation. We are trying to create a competitive environment where customers will go to what they see as their best option.
Mr WOOD: Thanks, minister. One day I will work out how Power and Water can sell electricity to another company and cannot compete with it, but that is probably to do with wholesale and retail prices.
Mr ELFERINK: That is about the cost of putting retail …
Mr WOOD: That is right. I have a question which has not been answered and I am still concerned about it. You would have companies like Northern Power and QEnergy taking the big juicy bits from the retail market. Does it not make sense that Power and Water would receive less money, therefore its profits would be diminished? I have heard Power and Water will become more efficient. I keep asking the question – please show me when it comes to generating, how it will become more efficient. I hear answers which I partially understand, but when it comes to the crunch I still have difficulty working out that if you have fewer customers, that means less revenue. If you have less revenue you have less profit, and that means the government receives less money. At the same time, is it still required to operate most of its generating equipment or does it close that down?
These are some of the fundamental questions. If we had more time we may have come up with some answers, but we have not and that is why I am concerned about what is happening.
Mr TOLLNER: I am glad you are getting to this. It may be one of the nubs of the issue for you. An important point to understand is that customers are not subsidising other customers. I hear it said that people living in the northern suburbs are subsiding people who live in the bush, or the big end of town is somehow or other subsiding households. If you take away the big end of town you take away part of the subsidy for the household. That is not the case; the subsidy is provided by the government in the form of a CSO. If you took away the CSO, everybody would be paying cost reflective prices, which would vary greatly around the Territory. However, we have this CSO in place.
No customer is subsidising another customer, so what we have at this point are non-contestable customers. They are the ones, in the main, receiving the CSO. The reason they are non-contestable is because these other companies, the competitors, cannot access the CSO at this stage. There are moves afoot to work out how to make the CSO available in order to have competition right through the marketplace.
As I have said, in other parts of the country that currently occurs, with between 55% and 80% of customers not on a regulated tariff. They are getting a lower price than those regulated by government, or they have things like deals on smart meters where they have real time tariffs. They can determine their usage by the time of day they switch appliances on and off.
This idea that you take away the big end of town from the Power and Water Corporation and all of a sudden it cannot provide the same service to households is wrong, and it is a misconception about how our utility operates.
Mr WOOD: Power and Water makes something like $450m profit. I say it is profit, and I know what you will say, but from that point of view it has made money. It has a lot of debt, I understand that, but if you take part of that $450m away from government by giving some of it to another company, like QEnergy or Northern Power, that amount drops. That amount of money is still going into the total bucket of money the government runs on. You will have less money in Power and Water, with more money going to QEnergy and Northern Power.
Mr TOLLNER: Could I correct you on a point there? It is not profit, it is sales revenue. There is a big difference. The Power and Water Corporation has never returned an economic profit; it very rarely returns an accounting profit, and when you take into account the amount of government-funded subsidies which go into the corporation, it is more than $100m, in most years, in losses. It would not be sustainable without that government subsidy. I want to clarify that it is not $400m profit. It is $400m in sales revenue, but that is not profit.
Mr WOOD: Okay, but the more sales revenue, the less debt, because you are making …
Mr TOLLNER: Not necessarily; can I tell you the Mick and Pat story about selling watermelons? They buy watermelons for 5, sell them for 5, and after 10 years in business they realise they are not making any money, but they have a lot of sales revenue.
Mr WOOD: As much as I like watermelons, we can live without them, but we cannot live without electricity. My problem, still, is: how will Power and Water work with less sales revenue? You have also said the current structure of the Power and Water Corporation is not conducive to efficient electricity supply to the Territory market.
The words ‘efficiency and efficient’ have come up many times in this debate, even in your media releases. You did mention to me before, and I hope you do not mind me repeating it, that the network is not very efficient. I do not know if that is the case, but I suspect it is. We have not been discussing the network, only generation and retail. You might be right, but I am not here to discuss that because it is not part of this bill. I want to know where the inefficiencies are because when a minister says, ‘We are going to make it efficient’, a counter statement is, ‘If that is the case, show us where the inefficiencies are’.
It is a real concern for me because gas generated electricity seems simple. How do you make it more efficient? A competitor like Northern Power will come in with brand new equipment and produce electricity at a cheaper price. That puts Power and Water at a disadvantage because I am sure it will not sell its generators until they wear out; the reason it is in debt is because it capitalised. There is not enough clarity about what is inefficient in electricity generation.
Mr TOLLNER: We could go in a mile of directions here. Power and Water does not necessarily run its most economic generator first. It may use its oldest one first because, frankly, it does not care and it does not matter. It is the same point I was making about Indigenous Essential Services. As much as you would like to put competition into that place, I cannot get my head around how you could do that. When you are trucking $60m worth of diesel around you do not really care; when there is a universal tariff, it does not matter. It is just taxpayers money going into it, and there is no incentive to make things more efficient.
Talking of efficiency, I made the point that the network price determination of the Utilities Commission made the point that the network was 27% less efficient than a comparable network in the country. In the conversation I had with you a couple of minutes ago, I said that if the network is 27% less efficient, one would imagine the whole organisation would be 27% less efficient, because you do not run one agency of your company inefficiently; it generally occurs across the board. It is a culture which was identified as part of the second Utilities Commission investigation into the system black we had. There was a culture of inefficiency across the organisation. That was determined by the Australian Energy Market Operator and Evans and Peck. For most Territorians it would not be a bridge too far for them to think Power and Water was an inefficient organisation. You would struggle to find many people who would say, ‘This is a lean, mean business’.
The other point is the majority of other generating utilities turn generators over every five years to make sure they have the most efficient generators. That may not be the case with the Power and Water Corporation because it does not matter whether it is efficient or not. It already has market share; it owns all customers and does not have to worry about competing. However, throw a bit of competition in there to the point where it could start losing customers and it would very quickly start to sharpen its pencils and find cheaper ways of doing things with more reliability.
Mr WOOD: Yes, I understand that and have not said I oppose competition, because competition already exists. I do not know if there is a fair process for competition when Power and Water is already in debt, and you keep going on about how much debt there is and how we must pay for it for generations to come. Is Power and Water in a position to buy new generators because it wants to be competitive or does that put it into more debt?
One of the reasons it is in debt is because it spent a lot of money on upgrades of the poo shooter, substations and all sorts of things. I am not here to argue the case that Power and Water has not been inefficient by the way. You are highlighting that we should have looked at this issue in a much bigger context through the Public Accounts Committee. We could have taken a more holistic approach, including the networks, but we were not given that opportunity. We have had to deal with what is in this legislation, and we have had to deal with one meeting of the Public Accounts Committee. The questions I am asking are ones we could answer if we had more time.
Going back to the second reading speech where you said the:
What you are putting forward to overcome that is developing three GOCs. Is that correct? Why are you making one company divide itself into three?
I will go back to my statements about Origin. Origin Energy is classed as an integrated company. I presume integrated means it works as one company but has quite a few divisions within it. I think it has exploration, it might have production and it has generation. I do not know whether it has part of the networks, but it certainly has retail. It has one board, and I am sure the left hand knows what the right is doing because that is very important when you are running a company where there are price and tariff fluctuations. We are setting up a company which will have three boards.
Mr TOLLNER: Three companies.
Mr WOOD: Three companies. Can you tell me if there is one private electricity company in Australia which does exactly that? If we are trying to be fair in competition with Power and Water, because we have to say, ‘You are in the market’, tell me where there is a company which breaks itself into three separate ones.
Mr TOLLNER: An enormous number of generators are just generators. I am not certain on the retail side, but there may well be. To clarify for you, Ergon is a retailer and owns remote networks, Origin is a gentailer, a generation and retail business, which performs gas exploration and gas production as well.
Mr WOOD: It has one board.
Mr TOLLNER: Yes, that is right. There are some subtle differences with what is happening in the Northern Territory which have also happened on the eastern seaboard. You will note, when you read that National Energy Market case study which was handed out, that in the eastern states their utilities were so big they could break their generators up several times and put them into various different combinations. In the Northern Territory, that is not the case; we are not intending to break up the generator business into several parts. That is why we are very keen to encourage competition to come to the Northern Territory. We want competition, but we do not believe Power and Water generation is big enough to split into two so we can have instant competition in the generation marketplace. That is a slight difference. I am trying to think of the other point you raised.
Mr WOOD: Show me a company which breaks itself into three and a company which does both generation and retail. Origin is a classic example, a big company, one board, and it does not turn itself into three companies.
Mr ELFERINK: I think Microsoft was broken up into two by order of the Supreme Court of the United States.
Mr TOLLNER: When you are worried about monopoly power, that is when you break them up. We are not intending to break up the generation business because it is not large, and there is some interest in other generation businesses coming to the Northern Territory, but, generally, what you are trying to create is a competitive marketplace. That was done in Queensland, New South Wales and Victoria because they had that ability to build businesses which suited the size of their marketplaces. Here we are splitting the Power and Water Corporation; it is still a relatively large business, large enough in today’s world to adequately have separate generation and retail businesses.
Mr CHAIR: We are getting a bit away from the legislation itself, so if we could tighten it up a bit.
Mr WOOD: I will try to get back to the principle. The whole principle of this legislation is to break Power and Water into three companies. I am questioning the minister as to why that is necessary because other companies in the business do not do that. They have one board and integrate it. We are disaggregating this company and we are having three boards which seems …
Mr CHAIR: I was not going to stop you; I was asking if you could keep it tight. I did not want it getting further and further out.
Mr TOLLNER: To explain, this is, I suppose, tranche one of the reforms. We are creating generation and retail businesses. I suggest in the future there will be discussions about splitting off networks, splitting off water and sewerage and maybe incorporating the gas sales division into a government department. There is a range of options, but this is quite a complex matter. We want to take things one step at a time, so rather than blow the whole organisation up, as someone suggested, and create six new government owned corporations, we will take it slowly with generation and retail first, bed that down, make sure we get a marketplace operating – look at separating networks down the track, as well as water and sewerage and the gas sales division.
Mr WOOD: You hit the nail on the head when you said it is complex. To get back to my original issue, I am disappointed that if you are now talking about the possibility of breaking it up into sewerage, water and gas, which only came into this debate more or less by accident – I was interested in how gas would work. It is something which should have been looked at much more holistically, but I will not drag on that. My other question, which I have raised in parliament, relates to how the Auditor-General said you could produce transparency and show each division of Power and Water and how they operate through the accountancy system which applied before 2008. My argument was that if the Auditor-General said you can show that transparency, you can still have the one board.
I will get back to my argument about Origin Energy. Origin surely has internal divisions within its company. It knows what it is spending within that company and the auditors, when they look at that company, can also recognise that as well. Why do we not model ourselves on that? That is instead of setting up what I call a more bureaucratic approach, which will cost money, and we have not worked out how much money it will cost. We could do it under your ministerial direction. You could tell Power and Water you will show, through your accounting system, where the money is going in each of those divisions and identify cross subsidies. The Auditor-General put that forward, and he knows a bit more than I do.
Mr TOLLNER: I am not having a crack at the Auditor-General in any regard; I have the utmost respect for him. Accounting separation has been, in some ways, the Holy Grail for Power and Water. It has been working on it for years, but has not yet gotten there. It is easily said, but not necessarily easily done. The concerns I have with undertaking accounting separation are that we are a rapidly growing economy and need more generation capacity into the future. At the moment the Northern Territory government has a debt problem; we do not have the ability to buy more generation capacity, so we must look at the private sector stepping up.
How you get the private sector to step up is to allow market competition. I have a media release from the Energy Supply Association of Australia. In the fifth paragraph it makes the point that:
Whilst I have ruled out privatising Power and Water assets, it is interesting to look at those states where they have privatised networks. It was also interesting listening to the member for Casuarina. He is saying no one will buy a network, but the network is the most valuable part of the organisation by a country mile. There are superannuation funds around the world lining up to buy networks; they snap them up as quickly as they can.
Mr VATSKALIS: Only if they are guaranteed a return. That is why they are paying so much in other states.
Mr TOLLNER: They are guaranteed a return. They are a regulated asset with a regulated price; it is as good as money in the bank. That is why superannuation funds grab them.
The other interesting thing to note is when you look at reliability and how it is affected – you saw what happened with the system black, where every householder received an $80 credit in their bill. In the privatised networks that $80 comes from the shareholder, so they are very keen to make sure they have a very high level of reliability because any type of black out affects their bottom line and shareholders. I have a couple of graphs which show the reliability of privately-owned networks as opposed to publicly-owned networks where, ultimately, whether it is the Power and Water Corporation who provides the credit or a government subsidy, it is the same thing. You see that private networks have reliability standards so much further ahead than publicly-owned ones.
Mr WOOD: The only thing that I will say about competition, by the way, is it must be ethical. Just see where Coles is going at present with the ACCC, when you get a duopoly. We must be very careful we do not put it up there as the be all and end all.
You mentioned in your response that Power and Water spoke about the spring. I will give you my quote from the PAC hearing. I said:
Why can we not achieve what Power and Water has nearly achieved? We perhaps need a bit more to finish it off under a divisional separation audited by you through a ministerial direction, which would save us money and at least compete with big companies which do not have to go through this so-called bureaucratic division you are trying to introduce. Private companies do not seem to do that, so why are we making the Power and Water Corporation do it?
Mr TOLLNER: There are a couple of reasons, and I will start again. The first and overwhelming reason is that we agreed to it in the mid-1990s, and the previous Labor government was turning up to energy minister council meetings agreeing to national reforms, never knocking up an objection. Somewhere along the line we should look at doing what we say we will do. That is one thing.
Ms LAWRIE: We deregulated. That is a furphy.
Mr TOLLNER: Secondly, we have an enormous debt and …
Ms LAWRIE: That is another furphy.
Mr TOLLNER: … deficit problem. It is all right for madam over here. She never had a problem borrowing or spending money, it came naturally.
Ms LAWRIE: One billion dollars in networks alone.
Mr TOLLNER: We have some big concerns about going further into debt and increasing our deficit. We do not want to do that. We know our economy is growing rapidly and we need to get more generation capacity into the system in the next few years if we are to meet the demand our economy will be generating. We need to attract private operators. How do we do that? We need to level the playing field. How do we level the playing field? You make like compete with like, a generation business competing with a generation business, a retail business competing with a retail business.
You have to understand that at the moment and into the future Power and Water will hold all the cards; it has all the customers, established infrastructure and has employees here. It is the one holding the competitive advantage. We are trying to create a level playing field. Competitors will know Power and Water still has a competitive advantage, but let us hope they think they can come here, run a power station and be able to take some of those customers off the Power and Water Corporation, otherwise we will not have the generation capacity we require into the future.
It is also unholy that we are paying $155m a year in subsidies to the Power and Water Corporation, with a population of 240 000 people. That cannot continue. The subsidy which goes into the Power and Water Corporation is like that every year. Sooner or later this corporation will not bankrupt itself, it will bankrupt government. We cannot keep flogging a dead horse. We need a bit of competition in the marketplace and things definitely need to change.
It was initially identified by the RMB, as our Health minister said, but more importantly, it was identified by Moody’s as one of those areas which was a drag on Northern Territory government finances, and it put our credit rating on a negative outlook. All of these messages are coming to us as that we must change the way things are. These reforms have been going on in Australia for 20 years; we have seen how they have been delivered around the rest of the country and have learnt those lessons. The people we have on board who are putting these reforms in place are experienced operators. They know how the market works around the rest of the country.
Furthermore, we want to get into the business of supplying the rest of the country with energy. The only way to do that is to adopt National Energy Market rules. We need the AER here; it does not just regulate electricity infrastructure on electricity, it also regulates gas and gas pipelines. If we are ever to connect to the national gas grid we must have the AER here anyway. The AER was also identified by Evans and Peck and AEMO as being inadequate to properly regulate the Power and Water Corporation. All of these things are starting to build, and over time things must change one way or the other. I am certain the opposition knows this too, but is more interested in playing funny political games and trying to scare people with privatisation and a whole lot of other things rather than knuckling down and saying, ‘Gee whiz, this is a bloody hard ask, let us do it’.
At the energy ministers’ conference last week, it was Ian Macfarlane who gave credit to Queensland for the way it handled the coal seam methane issue. He said it could never have happened unless everybody was united. The federal Labor government, Anna Bligh and the opposition were united, shoulder to shoulder, in getting those reforms through. He said, ‘You could not have done it without the support of the opposition and all players in parliament’.
This debate is so infuriating because I am certain, in my heart of hearts, that the people on the other side know exactly why these reforms are necessary but would rather play cheap jack political games than knuckle down and do the hard work and support government to bring these reforms into place.
Mr CHAIR: We are getting off subject
Ms LAWRIE: I have a technical question on a generation matter raised by the Treasurer. It is not off the subject; it is directly relevant to what he just said.
Mr CHAIR: I do not feel what he is saying is relevant to the debate at the moment.
Ms LAWRIE: He is responding to the second reading speech.
Mr CHAIR: I will be listening very carefully.
Ms LAWRIE: Yes, thank you. Treasurer, in that response you said there was a need for deregulation to allow competition. That, as you admitted before, already exists. You said the split is to tackle debt when the split will increase cost and the networks price alone will add about $1bn in debt. The interesting point there is this idea that it is required to provide for additional generation. How do you reconcile that statement with the Utilities Commission 2013 power systems review report? It says:
Mr TOLLNER: The next term of government is 2019-20. It is not that far off. I know for you it looks like a lifetime away – $5.5bn of debt, ‘Oh, it is only four years down the track. It is not with us now.’ You do not care about what will happen in four or six years’ time, and, like I said, the end of next term. You have no regard for the amount of time it takes to get approvals, build a power station, get all of this work done, and for the rate the economy is growing. Today I talked about Deloitte Access Economics revising its indicators, because the rate of growth is surprising many people in the Northern Territory, but your only interest is in talking the place down, trying to scare the living daylights out of people and getting in the way. It is time you moved on.
Mr DEPUTY SPEAKER: Member for Wanguri, I am leaving it up to you to bring it back to the subject. Have you finished, member for Nelson?
Ms LAWRIE: It was not on subject, it was a political rant.
Mr WOOD: I thank the minister for the statement about where you finished off last time. So he understands, I am not against reform, but we are going down the wrong path. We could have done it differently and still come up with the same outcome. People would possibly disagree. You said we will save money, because we are in debt. I have suggested a way of saving $7m or $8m by going down this path, instead of the structural breakup into GOCs. I understand that we will probably not agree on that. However in the end ...
Mr TOLLNER: Can I interrupt? There is no $7m or $8m; it is a number which has been plucked out of the ether by members opposite. As I said earlier, my expectation is it will cost somewhere around $2m; the running of a board is a cost to the company, it is not necessarily a cost to government. Implementing changes in IT systems is not a cost to government, it is a cost to the corporation. They are very cute with the way they pull these numbers out of the air. ‘It is going to cost us a bomb’; it is like the Opposition Leader claiming $1bn will go into the network. What a load of codswallop!
Mr WOOD: My figure came from the two graphs Mr Tregilgas provided, and I do not have them in front of me. The figures add up to about $6.8m. We have probably worn it out, but what is highlighted in this debate is that you are asking people to make decisions about reform when we have not had the chance to – we have had a good discussion tonight, but this is something that needed to go to the PAC, which could have investigated some of the things you have talked about, looked at set ups in other states and asked people about the KPMG report, which said, ‘Power is cheaper in Victoria than if it had been under private administration’. I do not know, but some people have said that is not true.
People must either go by faith that what you say is the best way, or we say we have not been given enough information to decide this is the right way for the Northern Territory to go.
We never had enough information to make a proper decision, and that is what has failed in this very important debate. It has been too rushed, and unfortunately the legislation will be passed tonight.
Ms MANISON: I have an operational question about the definitions of the portfolio and shareholding ministers. The Chief Minister appoints the shareholding and portfolio ministers; I am keen to hear the different definitions of those roles, and if they will change from what they currently are.
Mr TOLLNER: No, the roles have not changed, they have been clarified.
Ms MANISON: Thank you.
Clauses 1 to 11, by leave, taken together and agreed to.
Mr CHAIR: Treasurer, I presume you have amendment 18.1?
Mr TOLLNER: Yes. I move amendment 18.1.
Mr CHAIR: The amendment says:
Mr TOLLNER: That is correct.
Amendment agreed to.
Clause 12, as amended, agreed to.
Clauses 13 to 19, by leave, taken together and agreed to.
Clause 20:
Ms MANISON: I have some questions in relation to clause 20.
Mr CHAIR: Is the question about the amendment or the clause?
Ms MANISON: We have a range of sections there. Looking at division four, ‘Correction Orders’, and the section that is inserted, for example:
And so forth; where do you see this type of situation occurring, and is this normal to have corrections made by Gazette in these types of situations when errors occur?
Mr TOLLNER: I am informed it is so if there is a mistake in drafting we can fix it.
Ms MANISON: Going to proposed section 53T, ‘Ministerial directions’, it says that:
Mr TOLLNER: Yes, it may well be in transfers like the disposal of an asset or something like that.
Ms MANISON: Are there any other types of legislation where a minister can direct a government owned corporation or a government owned body to do something that is not lawful?
Mr TOLLNER: That is not quite true.
Ms MANISON: It is a big question, I am sorry.
Mr TOLLNER: It only applies in respect to transfer regulations.
Ms MANISON: Would it not be dangerous and unaccountable to compel a government owned corporation to accept an unlawful decision, particularly given the ministerial direction relates to valuable public assets?
Mr TOLLNER: Any direction I give to the Power and Water Corporation or any of these corporations must be tabled in parliament. If I give a direction to say, ‘You can transfer that’, it must be tabled. This makes transfers lawful; they would have to be tabled in this place.
Ms MANISON: Would you not accept there is clearly some risk in telling a government owned corporation, as the shareholding minister, to do something that is unlawful?
Mr TOLLNER: Government owned corporations have a very narrow charter. If a transfer is to take place that is outside of that charter, it may not necessarily be lawful. This rectifies that and allows those transfers to occur. When that does happen the parliament has to be notified of that and informed of that transfer.
Ms MANISON: Are there any specific examples where this would occur?
Mr TOLLNER: I cannot think of any off the top of my head, but if you want me to take that on notice I am more than happy to.
Ms MANISON: I am thinking it has been drafted for a purpose, so surely there are scenarios where we feel this would occur.
Mr TOLLNER: Yes, as I said we wanted to allow some flexibility in the system to allow us to make sure these separations occur in a timely manner.
Ms MANISON: Could the unlawful direction authorise a transfer of an asset to a private company?
Mr TOLLNER: No, not at all.
Ms MANISON: Can we put it on notice that you are able to give us some examples of scenarios where this part of the legislation has been drafted to give you that flexibility?
Mr TOLLNER: Yes, we should be able to do that for you. It might not happen tonight, but we certainly can.
I move amendment 18.2.
Amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 agreed to.
Clause 22:
Mr TOLLNER: I move amendments 18.3 and 18.4.
Amendments agreed to.
Clause 22, as amended, agreed to.
Remainder of the bill, by leave, taken as a whole and agreed to.
Bill reported; report adopted.
Mr TOLLNER (Treasurer): Madam Speaker, I move that the bill be now read a third time.
The Assembly divided:
POWER GENERATION CORPORATION BILL
(Serial 64)
Continued from 13 February 2014.
Ms MANISON: Madam Speaker, I will respond to the government’s move to split the Power and Water Corporation, pull the existing generation business unit out of Power and Water and create the new Power Generation Corporation.
I will say up-front again that the opposition will not be supporting this bill. This bill, as part of this suite of legislation, will have an impact on every Territorian. We all pay Power and Water bills and we all need electricity. This bill seeks to separate generation and make it a stand-alone government owned corporation operating independently in generating power and selling it to separate retail providers.
The government says the intent of this is to open up the Territory to alternative generation companies which will set up new power stations and generators, and to ultimately bring competition into the market to give people more options so they can have power delivered to their homes or business at a cheaper price. However, it would be utterly naive to accept the government is telling the full story or that this is the real intent of the bill before parliament.
It is a shame the government did not come clean with Territorians during the 2012 election campaign to tell them this was the path it was going to take with public utilities.
Since taking the reins of the Territory in August 2012, the CLP has been on a rampage with Power and Water, and we have seen staff, management and boards put through hell. They have faced the government’s continual mantra of trashing Power and Water and the professionals who work there, with the Treasurer often calling the corporation a ‘basket case’, ‘inefficient and bloated’ and a ‘dog’s breakfast’. More recently we saw the Treasurer attack Power and Water staff after the Utilities Commissioner handed down his report on the catastrophic March 2014 outage. The Treasurer again demonstrated his lack of respect and understanding around the complexities and challenges in the jobs Power and Water staff face every day.
The Treasurer has also made it abundantly clear he believes there are too many staff working at Power and Water and that they have far too much equipment than they need to do their jobs.
We now have these bills before the House, pushing through the breakup of the Power and Water Corporation in preparation for what will be asset sales, and there has been no consultation with Territorians on the future of the utilities. The public has not been asked what it thinks about the structural separation of the utilities and assets, and what appears to be a very clear determination of the CLP government to go down the path of privatisation.
During the February sittings the Leader of the Opposition moved a motion that the bills be referred to a parliamentary committee to facilitate public consultation and to obtain expert advice on the proposed split. Given this bill, along with the other two, impacts upon billions of dollars of infrastructure, and power prices affect everyone, you would think the government would lay some evidence before Territorians to justify what is proposed. Predictably, at the time the Treasurer declined to support this motion, and it was only an opportunity to do with numbers and complete chaos within the CLP which allowed some very short scrutiny to recently take place, looking at these bills through the Public Accounts Committee. Although this process has been grossly rushed we at least had the chance to ask some questions. Had it not been for the Blain by-election and the government’s inability to put these Power and Water bills through at the last sittings due to its lack of numbers and complete internal chaos, this issue and these bills would have already been done and dusted with next to no scrutiny.
One reason the CLP is keen to push these bills through with little scrutiny is because of the privatisation agenda which underpins them. The government, particularly the Treasurer, seem to have changed their tone over time with regard to their plans for Power and Water and the pathway to privatisation. It is crystal clear that this government, in line with its philosophical desire to sell what it can, has a preference to privatise elements of Power and Water.
This is true of generation, which is why we see this structural separation bill and the suite of bills before us today. In this Chamber over time the Treasurer seems to be coming clean about what he intends to do to Power and Water.
In this Chamber in December, the Treasurer said:
On 11 February, when asked important questions by the member for Nelson about the future of Power and Water, the Treasurer said:
He went on to say:
We have now seen the Treasurer sign up with his mates in Canberra, particularly Treasurer Joe Hockey, around his desire to see currently state-owned assets sold across the nation. The Chief Minister, in Saturday’s paper, was open about signing up to that at COAG last week.
In the NT News, he said:
We were not able, through those discussions, to discover which companies they were and the nature of those conversations. It would be nice to get a bit of detail around that, particularly to do with generation. The three bills introduced by the Treasurer to split up the Power and Water Corporation will put more pressure on Territory families and businesses. The government’s plans for the corporation, which depend on the passage of these bills – we have already seen the main one go through and these other ones certainly look like they will as well – will simply compound the pain already inflicted on Territorians by the CLP. The disaggregation and subsequent privatisation of the corporation will inevitably increase tariffs, reduce reliability and cost jobs. The structural separation is a thinly veiled plan towards privatising our Generation Corporation and selling generation assets, currently in the hands of Territorians.
Academics and research across the nation have pointed to this being the case. In an ABC interview with Vicki Kerrigan on 13 February, the University of Wollongong’s academic Professor Sharon Beder said, ‘What happens is that governments split up power organisations before they privatise them and governments are notoriously reluctant to admit that they are going to privatise because it is very unpopular because everywhere around the world where electricity has been privatised, prices have gone up, reliability has gone down’.
She also said, ‘But what happens is that competition leads to private companies cutting costs. This is what they call efficiency and this means cutting jobs which means less maintenance, less training for the workforce, more casualisation of the workforce and this leads to a loss of reliability of services and we are talking about an essential service here, which means more black outs which causes all sorts of problems. Accidental fires because things are not maintained properly and then when you get to the retail end of the competition of it, the competition does not actually lead to lower power prices.’
Power prices will not be cheaper under structural separation or eventual privatisation. This has been the experience elsewhere in Australia where publicly-owned electricity utilities have been split up and then privatised. Earlier this year in the NT News we also saw comments from a professor of Economics, Bill Mitchell, from the Charles Darwin
University. He said:
All of us as members of this Assembly encounter the struggles our constituents face, as well as the sacrifices and cuts they have had to make to pay power bills which have skyrocketed under the CLP government. If this bill passes today – it clearly will, as part of three bills before the Assembly – there will be more cost of living pressures and more pain for Territory consumers.
What I have also found staggering and alarming about the government’s plans for splitting the Power and Water Corporation is that it has shown no evidence to justify heading down this path. It was clear through the Public Accounts Committee process that no one could provide any evidence, cost-benefit or risk analysis of work done by government to show benefits which would flow on to Territorians from the structural separation. This appears to be ideologically driven by the government, with little work behind it to crunch the numbers to back it up. The government is playing with billions of dollars of infrastructure and has no evidence to show that this will deliver a better return for Territory taxpayers.
One also has to question what benefits structural separation will bring to the reliability of power for Territorians. After the catastrophic outage of 12 March the government tried to use it as an opportunity to promote its agenda to split the utilities. Given the fault occurred within the system controller networks which flowed on to power stations, the situation would still occur even with private operators in the market. Everyone would still have been left in the dark. The solution is not more generators but adequate investment to maintain and upgrade the systems network to cope with increasing demand in a growing economy, and investment in training and supporting staff to perform their highly specialised and complex jobs to the best of their ability.
To meet the demands of a growing Territory population and position ourselves to make the most of opportunities driven by economic growth, there has been significant investment in generation assets across the Territory in recent years. New power stations have been built at Weddell in the Top End and Owen Springs in Alice Springs. Top notch new power stations have been built and invested in to meet our future power needs, and as we just heard during debate, the Utilities Commission report said we have sufficient power capacity until about 2018-19.
We have seen significant investment in new generation sets at Channel Island, Katherine and Tennant Creek. Given the Treasurer’s admission in February when he said the sale of assets should be looked at, are these some of the assets which will be sold as part of the government’s privatisation agenda for Power and Water, and the new Generation Corporation this bill seeks to establish? It is a critical point in this debate which members must consider. Once those assets are sold, Territorians will not get them back. The investment will be gone and in the hands of a private operator. We will lose our assets and the investment we have made.
At the Public Accounts Committee hearing we also heard from QEnergy, a retailer, that purchasing older generation stock has been attractive in other places as a way of companies getting into the market, so to speak. Given amendments to the Government Owned Corporations Act will open the new Generation Corporation to having its assets transferred by regulations at the hands of the shareholding minister, one must ask what will happen to generators currently owned by the Territory.
The shareholding minister has some hefty powers by regulation to transfer assets of the new Generation Corporation as he sees fit, as we heard during the previous debate. If the sole purpose of establishing the government owned corporation was to transfer assets and liabilities appropriately amongst them, why has the government broadened the ability to transfer assets beyond that, between government owned corporations? Instead, the Treasurer has broadened his ability to transfer assets to subsidiaries, statutory corporations, corporations, body corporates and the Territory.
The government seems to be keeping its options wide open here, and the minister said during the previous debate that he was very keen to be as flexible as possible.
The government has made these changes because they are part of its plan to offload generation assets into the future and use it as a cash cow. As we discussed before, the government has signed up with its mates in Canberra to effectively encourage the sale of publicly-owned state assets. We heard about TIO earlier today, and we also heard during the previous debate that there is an ability to offload assets within the Power and Water Corporation and the new government owned corporations being established today. This legislation plays right into the hands of that agenda. Asset sales are clearly on the agenda of this government and it has signed up to it.
I am worried about the future and what it holds for staff in generation who will be transferred to the new GenCorp. They are told at this point that it is business as usual and it should not be a great change for them.
I note in the Treasurer’s second reading speech he mentioned the rights of corporation employees who will be transferred between the three corporations established under this bill. What the future holds is a great concern for Power and Water Corporation employees. Understandably, apprehension is based on previous sackings of experienced and competent employees, and constant attacks on corporation staff by the Treasurer. What will happen to staff as a result of decisions made by new boards with regard to the operation of GenCorp? Current employment conditions will remain in place until 2015, but what happens to new employees when that expires?
We have seen in other jurisdictions that when structural separation occurs and utilities move towards privatisation, staff do not benefit. Management levels tend to grow, while numbers on the ground at power stations and in control rooms reduce. Fewer staff means more work for those left and less capacity to do necessary jobs, including maintenance. This puts staff safety further at risk.
Through the Public Accounts Committee we were able to confirm there are presently 150 full-time staff in generation. I also asked for some organisation charts as part of the process, which Power and Water provided to the committee. I seek leave to table the GenCorp organisation chart as at 1 July 2014.
Leave granted.
Ms MANISON: This in an organisation chart for changes in GenCorp as at 1 July. It is important to get it on the record so we can monitor and track what changes happen into the future and whether these see a reduction in the workforce.
We also know fewer staff means less reliable services. It is important the new corporation continues to invest in staff and their training and professional development. They do highly specialised jobs which can be quite dangerous. One only has to go through an induction and a walk through the Ron Goodin or Channel Island Power Stations to see conditions on the floor in those jobs and that they are not easy or straightforward. Working in generation is a tough job and there are workplace dangers we cannot appreciate as we sit here in the air-conditioned Chamber and our offices. They work with heavy machinery and electrical equipment, and it is a job with more dangers than most.
The job security and staff of Power and Water must not be compromised by structural separation. I fear for them when the Treasurer has openly said he thinks there are too many of them; he expects there will be staff reductions as a result of structural separation and he thinks they have far more equipment than they need to do their job.
The government, particularly the Treasurer, has held little back in its efforts to trash the professional reputation and integrity of staff within Power and Water. They have been called a number of things by this government, and I again remind the Treasurer of the descriptions he likes to use – ‘inefficient and bloated’, a ‘basket case’ and a ‘dog’s breakfast’.
Highly-respected, knowledgeable, expert senior managers have been sacked or moved to other places. Their highly-respected board was sacked. Highly-respected members of the handpicked board have resigned. Staff morale at Power and Water is currently at an all-time low. People are uncertain about their future and do not believe this government appreciates their hard work. I hope the government shows them the respect they deserve through this process; however, I am not too optimistic on that front.
I also note the cost of structural separation – there have been many questions around – and how much this has been attributable to the Generation Corporation and whether there will be gains made from this expenditure. With regard to the cost implications of separation there will be the following: legal costs to establish the three new corporations; the cost of developing contractual arrangements between the new corporations; operational costs for additional boards; ongoing additional executive management expenditure, including salaries for new CEOs and Chief Financial Officers; ongoing annual costs of establishing separate support functions and systems; rebranding for the new Generation Corporation; and new systems and other infrastructure.
During the Public Accounts Committee hearing we heard there are estimates in place, but these are still to be reviewed after this legislation goes through. Section eight of the NewCo Project Governance document sets out budget development principles which strive to have the budget established by best case scenarios. That is how it has all been budgeted. At this stage NewCo is talking about $6.8m for 2013-14 and 2014-15, while for the Power and Water Corporation the Public Accounts Committee said the other day that figures for 2013-14 alone had equated to $2.2m spending on structural separation.
We have also been told that after this legislation passes those estimates provided to the Public Accounts Committee will be reviewed again, so this is clearly not the last we will hear of those figures and where they will land. We know from NewCo’s governance document that the Treasurer will have to personally sign off on every dollar readjusted in the budget to separate Power and Water, so it will be interesting to see what is signed off between now and estimates. We will be asking many questions throughout the estimates process about where those costs have landed. We all know the budget expenses the government has been paying for, such as the services of commercial lawyers and the drafting of legislation within the Government Owned Corporations Act and for advice on separation. It is clear it is putting mechanisms in place to offload the Generation Corporation, that is, to offload assets when it sees the time is right.
The government has had to shuffle tables and chairs in the Mitchell Centre to make room for a myriad of consultants and advisors working on the split and, ultimately, the privatisation of the corporation. Beyond the January 1 start time of NewCo we have heard little about some of the costs accumulated well before that. The policy intent of these bills is deeply flawed and flies in the face of experiences elsewhere in Australia. We have seen a very rushed process, with no evidence, numbers, data or analysis to back it up. This is being rammed through by the government with no evidence, proof or analysis of what impact this will have on the price of power in the Territory.
The disaggregation and privatisation of electricity utilities drives up prices for consumers, reduces reliability of supply and costs jobs, particularly those of blue collar workers. The Treasurer’s conservative colleagues interstate are re-amalgamating their generation corporations with retailers because splitting them up has not worked.
If disaggregated electricity utilities do not work in markets with millions of consumers, how will they work in a small market like the Territory? On the issue of the corporatisation and privatisation of electricity utilities, Professor John Quiggin, Australian Laureate Fellow at the University of Queensland, said this:
I urge members opposite to carefully consider this bill and what it will mean for their constituents. No matter where they live, in a remote community, the towns or urban centres, Territorians will suffer under further price increases.
The people we all represent have already shouldered the burden of huge power increases, and we are following the Treasurer down this path.
I urge members not to believe the spin of the Treasurer, and take note of the continually shifting goalposts when talking about Power and Water.
Structural separation sets up the sale of assets which belong to Territorians. It will compromise the essential service Power and Water is, and make it into a profit-driven machine.
We oppose the bill to establish the Power and Water Generation Corporation, as well as the other two bills before this parliament, in the strongest terms, and I urge all members to carefully consider them and the impacts they will have on constituents. Thank you.
Mr ELFERINK (Attorney-General and Justice): Madam Speaker, I will not be on my feet long, because I am aware of the time. However, I will point something out; I noted the member for Wanguri started quoting Bill Mitchell, the economist at CDU. She then talked about ideological pursuits and those sorts of things. I refer to the Wikipedia entry on Bill Mitchell, the CDU economics professor; I will quote from that entry, which I presume is from his university bio. It says:
It goes on; he clearly has an axe to grind from an ideological point of view. To rely on Bill Mitchell to support your arguments is to rely, if you like, on the works of Karl Marx to support your arguments. I do not use the term lightly, but in a seminal work by Bill Mitchell on his blog site – he has a blog entitled ‘We need to read Karl Marx’. Karl Marx was not who you would call a right-wing figure in economic history.
I am always interested when I hear members from the other side quoting people, because when you look them up, the people they are relying on are not slightly left; we are talking about people who have an axe to grind, which is more ideologically bound than many of the unions we have to deal with from time to time in EBA negotiations.
I will also quote from Bill Mitchell’s blog, where he says:
She then accuses us of having an ideological axe to grind. If there was anybody with an ideological axe to grind it would be a person quoting Karl Marx at length to support their world view.
Whether the member for Wanguri realises it or not, Marx is dead. He died over 100 years ago, and the legacy he left the 20th century because of people trying to adhere to his world view was one of pain and anguish that went on and on, and you heard this sort of thinking weave its way into the member for Wanguri’s contribution tonight. It is about protecting the jobs of the workers who work in the Power and Water Corporation. It is about making sure those jobs are protected. At what cost? Who pays for that?
The problem is the longer you try to forestall an economic tide or push, the greater the agony when the dam bursts. That is the lesson learnt in Portugal, Italy, Ireland, Greece and Spain. Those countries have discovered the joy of trying to push pain back, because if you try to avoid a little pain now and do it an artificial way, which is still argued by people like Bill Mitchell, when the correction comes it is a crass, gross and substantial one. Part of the reason there is an element of pain identified by members opposite in this debate is because we are now the last ones to go down this path. It has worked and continues to work in other jurisdictions. Yes, it gets tweaked in other jurisdictions, but we have not moved on as the rest of this country has.
This will not be the panacea for all difficulties faced by people using the Power and Water product, certainly in the electricity domain. I do not believe it is intended to be the panacea to fix everybody’s problems. This will not provide free electricity; nobody is promising that. What it will do is restrain price growth and moderate the problems which must be dealt with at some point in the not so distant future, and that will lessen the effects of the correction when it comes.
This is a matter of foresight, predictability, and is not in pursuit of policies advocated by Bill Mitchell when he talks about the activist role of government to support jobs. Bill Mitchell’s seminal work talks about full employment, and then describes an activist role of government to bring about full employment. It was recently tried in Greece, Spain and a number of other countries, and they have now been served the credit card bill.
It is the definition of members opposite that they believe the credit card is a way to govern. If productivity does not match spending, that value must come from another place, and that comes in the form of borrowings. When you go down that path there is a bill to be paid at the end, and that is what we have been struggling with since coming to government. We continue to struggle with it now, and the last thing I want to hear in this Chamber is Labor Party members telling us we should fall lock step in cahoots with an economist who believes Karl Marx needs to be revisited and adopted as a way of governing the economic future of the Northern Territory.
I disagree with Bill Mitchell’s world view. Those things are archaic and essentially dangerous in the long term. I am disappointed the member for Wanguri’s arguments are heavily weighted around the opinion of an economist opinion who believes Karl Marx deserves another visit. I do not agree.
Mr McCARTHY (Barkly): Madam Speaker, so sayeth the member for Port Darwin, who has not told the House how many Territory workers will lose their jobs. Those with a poster of Karl Marx on their wall will preferably be the first to go.
Let us talk facts about why there has not been any real analysis around this subject. We have heard from numerous speakers who wanted to look at an analysis and an evidence-based approach, but it has not come. We have talked about the possibility this would have already been rammed through, only you guys had a mass meltdown because you could not all be in the same room together. This government is undertaking major economic reform, and its members walked out. One was on leave, one was absent on duty, you had to push it out and we heard, ‘Just trust me’. How many jobs will be lost? Let us hear the minister tell us how many jobs will be lost. How many Territory workers will lose their job and go onto Newstart? That will be okay, won’t it? It will push them over to the responsibility of the Commonwealth government. We are not hearing anything about this, and the member for Port Darwin comes from the big end of town. I come from Tennant Creek; tell me what will happen to power generation there.
I will tell you what certain people say about that. A Power and Water document called the ‘Responses for Tabling’, from the Committee on the Northern Territory’s Energy Future public hearing on 20 March 2014 says, in relation to this new company which will be set up – it is on its paper which was tabled in relation to smaller power systems:
Not only Tennant Creek, but Alice Springs gets a mention. I would consider it to be a big customer base, but not in this model. This has come directly from the Power and Water Corporation, which responded to the committee’s questioning, an avenue we wanted to go down.
We also wanted the Public Accounts Committee to do the analysis around this, but once the numbers for Blain came in – it was a 10% swing by the way, but nobody wants to talk about that on the other side because many of these marginal seats are less than 10%, and there are two right in front of me. Anyway, we will not talk about that. You got your number, you are a 13-12 game, and soon as that 13 came into play nobody wanted to revisit the Public Accounts Committee. It was a sad con job because I witnessed the CLP, in opposition, attack the member for Nelson, and it then came into government.
I thought these people with half a brain would leave him alone, but their egos got in the way. They tripped over their egos and started to attack the member for Nelson from a government bench. I found that disgraceful, yet only a month ago, when the desperados were in a minority situation, who did they start to suck up to? The member for Nelson; he is a good bloke and he does it, as the member for Port Darwin says, in the interests of the good folk of the Northern Territory. He got that motion through, and it was self-referred to the Public Accounts Committee. What happened after Blain? ‘Wipe it, we will be on our merry way.’
Anyway, let us get back to the important part of the debate, that being the Treasurer’s response in telling constituents in Tennant Creek and Alice Springs how this will affect them. We will go a bit deeper, shall we, ladies and gentlemen? Let us talk about Yulara, Borroloola, Ti Tree, Timber Creek, Kings Canyon, Daly Waters and Elliott. Let us talk about how the Power Generation Corporation will make sure those customers are looked after appropriately.
In September last year, when questioned by the NT News about the split, the Treasurer said:
Treasurer, in the interest of open and accountable government, and in closing this debate tonight, can you tell Territorians who you have been talking to, what you have been talking about and how this new system will deliver cheaper power for them? Which Territorians? Those who live where? How will it deliver the same benefits for those people in regional and remote jurisdictions? We would like to know, Treasurer, who you have been talking to. Who is on the blocks to come to the Northern Territory and take up position in a very lucrative customer base? As the Treasurer said in the previous debate, he has now set the ground rules for these changes, and the Territory economy is booming. The Leader of the Opposition challenged him with the word he cannot quite articulate – the Icthys project – and I will add the Marine Supply Base and Darwin Correctional Precinct to that. They are all projects which were bagged out.
One thousand jobs: we had to create a major intersection on the Stuart Highway to simply manage the traffic going in and out of that area now. I agree with the Treasurer that the economy is booming, and it all happened in the last 18 months, yes? That is right, we will have them believing their own rhetoric. The customer base is there, but what about the rest of the Territory? Once again, we get into the debate; please explain to me that the cash cow of the current Power and Water Corporation, which is generation – and we will get to retail directly – will start to be stripped down and broken up. These new associates of yours who are coming across the border to do business in the big end of town will no doubt severely impact on the Power and Water Corporation’s bottom line. It is an income bottom line, and it will be the entity left to look after the rest of the Territory, the places where I live and the people I represent. How will that happen? How can we be sure it will all go to plan, or will it be another, ‘Just trust me’? We will wait and see. The Treasurer could put all of this to rest by telling us about the good companies coming across the border that he has already been talking to, how they will change the game, how the original Power and Water Corporation will survive being left with the poor cousins across the Northern Territory which need subsidies, and how the Indigenous Essential Services system will be maintained, as he keeps alluding to and is definitive about when wound up.
I ask about the consolidated and general revenue of the Northern Territory government and how they will support that. When the Power and Water Corporation is in the new era of a very reduced revenue bottom line, how will it fund the innovation we need in the bush?
I agree with you, Treasurer, that it is a good plan across the Northern Territory and a very opportunistic situation, because renewable energies and alternative energy sources can be a big part of the CLP’s Framing the Future plan. That can be a future economic driver for the Northern Territory. The Power and Water Corporation will be given responsibility to go into the regions and remote areas and do that business, while these other companies coming across the border in the big end of town will be spinning out power as fast as they can produce it. How will that balance take place, Treasurer? I am very interested in how you will deliver what is a good, innovative policy relating to all of those renewable energy opportunities across the Territory, reducing the bill for diesel.
Under current arrangements we saw three hybrid power stations delivered under the previous government into remote areas. These are not only great data research stations which will inform good policy about renewables into the future, but also good outcomes in reducing the diesel fuel and the carbon footprint. How will that continue into the future? When will the next three hybrid stations be delivered by the Power and Water Corporation into regional and remote communities when their income bottom line will be severely affected by this new system which will definitely flourish in the Darwin and Palmerston areas? These are a few questions I have, and I ask these questions on behalf of many constituents who have been having the conversation around their situation.
This can be summed up, essentially, with a very short paragraph: Treasurer, can you ultimately guarantee the uniform tariff will be maintained? Profit will drive the operations of private sector companies who enter the NT market, and will be well and truly located north of the Howard Springs line.
That, essentially, is the question coming from the regions and the bush. It is also associated with the Indigenous Essential Services budget, and we are not sure about those answers. You seem very confident everything will be okay – ‘Just trust me’. However, they are serious questions coming from Territorians concerned that this is major economic reform.
As the member for Port Darwin likes to stereotype the socialists, I will stereotype him with major Liberal economic rationalist policy, the market-driven economy. However, I have lived in New South Wales, I understand Queensland and I have spent time in Victoria and South Australia. I get it in the eastern block, but I do remind the Country Liberal Party about the unique nature and challenges of the Northern Territory. I question whether this will rebound on you very shortly or within the bounds of time, as the Leader of the Opposition said, when the Territory starts to feel the full effects of one-,two-,or three-year costs and any serious challenges around the Power and Water Corporation operating under its new regime.
I look forward to the Treasurer’s responses in his wrap, and maybe I should start to put together 1000 questions for the committee stage. That would be good fun; I am sure everybody would be looking forward to that. Why not? This is important enough and this is the House of debate. We do not have the evidence in front of us; we do not have the cost-benefit analysis and the Public Accounts Committee has been taken out after a 13-12 result in the Blain by-election. We need to leave this House, go back to our electorates and advise constituents that it is okay, just trust the Treasurer and his mates on that side.
Mr STYLES (Transport): Madam Speaker, I was not going to speak, but I have been listening to some of the stuff coming from members opposite.
I made a couple of notes earlier, in case I felt the urge to speak on behalf of my constituents. The Leader of the Opposition earlier talked about economic credibility. I will refer to a graph of the non-financial public sector debt, and for those who are viewing this debate, I ask you to note the left hand side, which shows when the former Country Liberal Party was in government until 2001. You will see, moving along the timeline, that the ALP comes in and the debt goes up. The GST cash truck turns up from Canberra, it drops a bit and the current Leader of the Opposition then takes over as Treasurer of the ALP Northern Territory government. We then look at the start of a pyramid being built; for those watching you can see it goes up on a 45 degree angle to a projected debt of $5.5bn.
The Leader of the Opposition is the architect of that debt, and she talked about economic credibility. It is interesting because I get around to my shopping centres every Saturday morning; we go there and I talk and listen to people about a range of things. That is one aspect, whilst the other is my family and my children’s friends; I go to barbecues with the family, and there are people with little kids there. They talk about the debt and their kids’ debt – they are my grandchildren – and how long we will be paying off the spending of the architect of what is now a horrific debt to income ratio, the current Leader of the Opposition and then Treasurer.
The COAG agreement, as we heard the Chief Minister talk about from when he was at the meeting last week, was signed in relation to Power and Water, and the Chief Minister had the support of everyone at that meeting. It was a unanimous decision to support what the Northern Territory government is doing with Power and Water.
I note that around this country there are two Labor governments as part of COAG which have endorsed what we are doing here. I ask the Leader of the Opposition if she is out of step with what the rest of the country is doing and her own side of politics.
Reform within the electricity network has been going in this country for 15 to 20 years. The member for Casuarina talked about the WA government privatising things, because he was defending the fact Labor governments have privatised assets as well. My information is that the WA Labor government, when it privatised power and water, did not adopt the National Energy Market rules. It had a different system and went out on its own. My understanding is it did not make a very good job of it.
I look at that example, as well as others around the country. Who privatised power services in other states? It was Labor. Labor led the charge of privatisation. It also floated the dollar, and if the member for Casuarina’s information is correct, it privatised the Commonwealth Bank as well, where it made many changes. I also recall that happening.
Labor governments around the country have done exactly what we are doing. For the sake of argument you might say we are following Labor’s lead, yet we have an opposition here, a part of the Australian Labor Party, saying ‘Oh, no, you cannot do this’. We are the only jurisdiction in this country still to adopt National Energy Market rules and take up the option of bringing efficiencies into the system.
The member for Port Darwin talked about someone taking some pain. We must have this discussion and we may have to go through some of those painful things to get some competition into the marketplace.
With the ‘developing the north’ policy the federal government has adopted, as well as those undertaken by the Territory government, we will have increased activity here. It is coming, and you have to plan to be part of it. Planning to be part of it is about having competitive industries and competitive supplies within the Northern Territory.
If you have a monopoly things do not happen. I have said this before in this House, but when I first came here I think calls to southern states cost probably about 10 times more than they are now. If you extrapolate it out, a call to Perth, where my mother and father lived, would cost an arm and a leg these days, but it does not. Governments of the day saw benefits in introducing competition, and it has driven down the price of telecommunications.
People were saying, ‘Oh, this will be terrible. You will introduce this and what is going to happen? We are selling off Telecom’, as it was known in those days. When they started to separate Telecom, we are doing that now – the NBN is coming and there is a range of other providers coming into the marketplace. The necessity to become more innovative and efficient is the mother of all creation. What we have now is other players coming into the electricity market to figure out how they might generate power more cheaply to become more competitive.
Those opposite talk about a range of issues, and say we should be doing this and that. There are people who know more about electricity production than everyone in this room put together, and there are those who will come up with ideas. If it is necessary they will be thinking; they will hold brainstorming sessions. That is how you come up with new innovations. There are things we in this House, and some of the people in the Northern Territory, probably have not even thought of. When it becomes necessary to think about those things, ideas on how to become more efficient and effective will come forward.
In the days of tight budgets, given we have inherited a massive debt and have to manage that – we have a plan to get out of it. There will be some pain, but I do not want to continue on the road the Labor Party was going where I am hocking my grandchildren’s future and where they will be paying off the excesses of a Labor government which ran between 2001 and 2012. I do not want to be known for that, and I know my colleagues do not. When we have wing meetings we talk about what we want to leave the Northern Territory. Do we want to leave it a worse or better place? We want to make it a better place, which is why we are open for business. It is about encouraging innovation, competition and a range of things in mining, oil and gas and agricultural production. We hear things on this side of the House all the time about what we want to do to enhance the Northern Territory. It is not only about what we want to do and what the plan is, but also about executing it.
There are many things going on behind the scenes at the moment, but when you had a style of government which was based on borrowing more money and throwing it at things like fairy dust, things slow down. We have to wind the whole machine up, and we are doing that on this side. The budget the Treasurer will deliver next week, given the horrific debt both we and the federal government are in, courtesy of the Australian Labor Party, will be quite successful. We have a plan to get out of the trouble we have been handed by previous governments, both locally and federally.
I heard the member for Wanguri trying to paint a picture of chaos, disaster and the government being in disarray; there was a bundle of words which I cannot remember exactly. I do not know about that, but we are doing some great things and government is going on, albeit the opposition would like people to think it is in chaos. The only word I did not hear the member Wanguri use was anarchy; she obviously forgot that one and should have thrown it in as well.
Some of the economic and police figures coming out, as well as some of the things we are achieving, speak for themselves. These are not things we pluck out of the sky; these are figures produced by the same public service those opposite had when they were in government.
It demonstrates that this government is achieving in so many different areas. I feel sorry for those opposite. The member for Barkly seems to be a bitter person; he is angry and seems to take it out in this Chamber on anyone on our side of politics and anyone who would dare to disagree with anything he says. It is a shame, but I understand it because when you run the Territory into such a debt, had policies which did not work, and someone then puts out fiscally responsible budgets working on reducing debt so our children’s future is secured, and has some of the results we are seeing come from the same public service those opposite had, I would probably be upset too. They had policies which did not work, and they want us to revisit them.
I find it amazing that if you have something which does not work you would still want to flog it. I think it is called flogging a dead horse, and the opposition is doing that. We on the other side want to fix the horse, pat it, love it, give it a good feed and say, ‘Come with us on a journey, and we will walk together’, because we will make it better for everyone in the Territory.
You hear the Labor Party trying to rewrite history. If I was on that side I would be trying to rewrite history as well, because it is not a very good story they have to tell. We listen to the Leader of the Opposition, and I think she believes that if you say something often enough people will start to believe it is true. That is the theory they operate on. They continually demonstrate that they want to change the history of what occurred in the 11-and-a-bit years they were in government.
That is a sad indictment on what they did in government and what they did not achieve. They are probably angry because we have been in government for 18 months and have been able to turn so many things around, simply because we are a ‘can do’ government. It is about being open for business, and the one thing I hear about is word getting around within the Territory, Australia and overseas that people are aware they have a supportive government which will work with business to generate wealth. There are people who have capital they would like to invest somewhere around the world. By demonstrating we want to become an efficient and effective economy, people will invest in the Territory.
A number of groups have recently been in the Territory with amazing amounts of money to invest. I have heard those groups have somewhere between $500bn and $1 trillion, and are looking for somewhere to park. There are people on this side of the House who have spoken to those people and said, ‘We would like to see you park some of that here’. Those people did not get that money because they waste it by throwing it around like fairy dust. They get it because they are smart people and know exactly what they want to do. They want to invest in a smart economy, and if we continue down the path the former Labor government had us on we will not be a smart economy. It is pretty silly to run up a $5.5bn debt, and there are incredible debt to income ratios which are unsustainable. That is not very smart, and people do not invest in areas where people are not economically responsible.
I go back to the Leader of the Opposition. I found it amazing that she would accuse us of not having any economic credibility. However, I do not know of too many people who turned up here when she was Treasurer with an $800bn bucket of money to say they wanted to invest some in the Territory. I did not see her talking to them to say, ‘Have we got a deal for you’, because they did not turn up. They do now – why? It is because the word is out in the international community that the Territory is a place you can do business, where government will work with you to help generate wealth, and with wealth comes taxes. If you want to change your debt to income ratio, the best way to do that is to generate wealth. If you double your income, you halve your debt to income ratio. You will suddenly look like a viable organisation, and rating agencies will continue with our good rating and not downgrade us, like we were due to be. If the previous government had won the last election we would be paying far more for our borrowings. We would be in serious financial trouble if people had downgraded us, and investors would not be lining up at the door to invest in an economy which was going down. Fortunately we won the last election and have been able to turn it all around.
It comes from reforms, and these are not only our ideas; they are what Australia has done. Those opposite will say this is terrible and the sky is going to fall in. They would like to keep everything as it is, and if they did that we would be going down the gurgler. I am not going to allow that because I am part of a team which will ensure our kids’ future is secured.
What we will see in this Power and Water separation is a more effective organisation, as well as efficiencies. The Utilities Commission, the two Labor states, COAG and the rest of Australia want us to do this, and are supportive of what we are doing. The only people out of step with everything happening in the Territory are the current opposition. I would be ashamed if I was an opposition member; I do not know how they sleep at night, because they do not seem to be worried about my kids or grandkids. I do not know if they are worried about theirs, but if they were they would support what we are doing to create an efficient and effective power supply, as well as all other efficiencies we are trying to build in to the economy so people will come here, invest and create jobs for our kids.
I support this bill, and I encourage all those opposite to look at reform happening around the country and who is supporting it, outside of their little bubble.
Madam Speaker, I commend the bill to the House.
Mr TOLLNER (Treasurer): Madam Speaker, I again thank those who spoke during this debate. I will not speak for long, but I heard a number of people talking about economists and others. While I do not intend to denigrate economists or any of them, I will draw the Chamber’s attention to the booklet, National Electricity Market: A case study in successful microeconomic reform. I draw members’ attention to page 29 where it talks about the US economist Vernon L. Smith, who was commissioned as a consultant advisor to the market simulation program, part of the reforms we are discussing today. He was engaged because he popularised experimental economics, which highlighted the value in trials and experimentation as part of the process of designing a market later in 2002.
Vernon Smith was awarded the Nobel Prize in Economics for having established laboratory experiments as a tool in empirical analysis, especially in the study of alternate market mechanisms. Page 29 says:
I mention Vernon Smith because he was instrumental in setting up what we now call the National Electricity Market. He provided advice about how we should go about it. He is a well known global economist, and says the wholesale market in Australia has implemented features which make it among the most advanced anywhere from the perspective of reflecting good economic design principles.
The point I make is that for those economists you find who will pour scorn on the National Electricity Market, you will always find others who will laud it and say it is one of the best in the world. That is exactly what we are modelling our system on.
There was plenty of debate on the previous bill. I do not intend to speak any longer, but I do commend this bill to the House.
Motion agreed to; bill read a second time.
Mr TOLLNER (Treasurer)(by leave): Madam Speaker, I move that the bill be now read a third time.
Motion agreed to; bill read a third time.
Continued from 13 February 2014.
Ms MANISON (Wanguri): Madam Speaker, I respond to the government’s structural separation agenda for the existing Power and Water Corporation with regard to this bill to establish the Power Retail Corporation.
This bill aims to make an existing retail division within Power and Water Corporation a stand-alone government owned corporation responsible for the sale of electricity to households, businesses and big business customers. It will also be responsible for the purchasing of electricity to provide it for sale and supply to its customers. The government says this is in the best interest of Territorians and that they stand to gain from this arrangement as it will encourage competition amongst retailers and generation companies.
However, there is no evidence or case studies which point to any success elsewhere in Australia, with cheaper power bills for consumers. In fact, where competition amongst electricity retailers has been introduced elsewhere, most customers ended up paying more for their power. Even in Western Australia where structural separation was introduced almost 10 years ago, government has now gone about amalgamating its retail and generation arms of business to save costs.
Despite this, the government is determined to go down this path to create the Power Retail Corporation, even though it does not have a shred of evidence that this will mean cheaper power bills and better outcomes for Territorians.
As we heard during the recent Public Accounts Committee hearings, established retailers are already operating in the Territory, and the desire to target Territory consumers is somewhat limited. For example, the Public Accounts Committee heard from QEnergy, and it was clear that small household customers were not on its agenda, as it did not see the right conditions in place to chase them. In fact, QEnergy managing director Kate Farrar said:
In order to have these retailers competing for households, will this mean the government removes subsidies which exist for customers which already help keep prices a bit lower? Will Territory customers have to start paying even more than they already are to encourage more private companies to risk jumping into the Territory and competing in a small market with more limited returns?
Given the views of this already established and highly knowledgeable retailer, you have to wonder. QEnergy also said the price order in place for big businesses to help keep power prices at current rates should not continue in its current form, to help it be more competitive. It means it would like Power and Water to charge big customers more. What will that mean if business passes on power costs to consumers again? Everybody will end up paying more.
Although this bill before the Assembly is only a few pages long, the complexity and impact will be quite large. The bill also drives many questions about which staff will go where, and how structural separation will mean the continued shared use of services and assets between the new Retail Corporation and the Power and Water Corporation.
There are many questions which need to be answered. Most importantly, does the government have any proof this exercise will benefit anyone?
We, as members of parliament, have had little opportunity to scrutinise these bills. We have already gone over, in much detail, the fact there has been limited opportunity through the Public Accounts process, and the fact we are debating this legislation before the Public Accounts Committee process inquiry has finished is not ideal.
For all of the promises in the southern states regarding more competitive pricing of electricity for the consumer with competition and privatisation, it simply did not deliver. People are paying more for power than ever before. As for arguments from government that it is everyday household customers who will benefit from this bill to separate the retail arm, the reality is it will not be the family of four sitting in their home in Wanguri who competitors will be after, nor the couple living in a unit in Stuart Park and it will not be the everyday residential consumers in Darwin, Katherine, Alice Springs and Tennant Creek who companies chase. Competitors are chasing the big customers; they are after the big buyers of electricity. They will be knocking down the doors of organisations with big power bills and big budgets.
The stark reality is it will not drive down the cost of electricity for households which have already been slugged with a 25% increase, with another 5% on the way next year. Despite what we have heard about no further increases, the network price determination has now been released. It is about 30% and we are yet to find out details of who will foot that bill.
At present the Power and Water Corporation includes the business division of retail, which employs staff tasked with a range of jobs. It is a highly specialised and professional team, which is often forgotten in the context of Power and Water, despite the fact they are on the front line with customers every day. They manage billing, connections and disconnections; they are on the phone to customers and we see them at the retail counters. They have a tough job, and it has become tougher under the CLP and the massive price hikes it has driven. It is retail staff on the front line who have been dealing with customers outraged at their increased bills because of the government’s 25% increase to power. It was retail staff who copped abuse when people started getting their power bills and the massive increases first came through for power, water and sewerage. It was retail staff who also copped the fury regarding recent catastrophic outages and people seeking compensation who were very confused due to mixed messages from government.
The retail team has had a very tough trot under the CLP. They have no easy job as it is, and this split has left them with further uncertainty about their role in the future. This bill makes the role of retail staff even more confusing.
At present there are 78 full-time staff working for retail within the Power and Water Corporation. I seek leave to table the proposed new organisation charts for the retail corporation.
Leave granted.
Ms MANISON: It is important we put those on the record today so we can show what Power and Water looks like at the start of this structural separation and see down the line whether or not this activity has been driven by looking to reduce staff numbers in the Power Retail Corporation.
We know the Power and Water Corporation and the Power Retail Corporation have a day X in mind where they seek to achieve total structural separation. It will be interesting to see what the organisation looks like on that day and whether or not it has delivered what the government has planned.
In the Treasurer’s second reading speech for the bills of structural separation he said:
Further, in the Department of Treasury and Finance’s Northern Territory electricity market reform information paper of February 2014 it says:
We have been told everything has been sorted, systems are ready to go, there is no confusion to be had and this can all be accounted for separately in the true spirit of accounting transparency that so much of this bill and split is about.
When there is a catastrophic power outage, like we saw in March in the Top End, where do customers go to get answers? If people are seeking compensation for their appliances blowing up as a result of an outage, who can they speak to if it is a network fault, for example? If the problem was caused by the new generation competitor, who cops the blasting down the phone from the customer sitting in the dark? Will there be clear arrangements in place when there are Power and Water emergencies and outages, and how will those be communicated to customers?
The shared service element remains a tangle of service level agreements all over the place, with no clear date in sight for clear separation. We have been told everything will be the same but different on 1 July 2014 under these new arrangements. You have to question how the shared service arrangements will go post July 1, and if it will be as clear cut as the government would like us to think.
We have heard much from this government that changes to date are designed to create a more competitive market so household customers and businesses have access to more deals on cheaper electricity, but this has not been the experience down south where customers have ended up paying more.
With a small customer base in the Northern Territory, one could argue it would be difficult to attract companies to take on the task, given the numbers of customers are not so high. As I have said before, it is clear they will be after the big customers first, not the small household customers the government would like to promote, on a regular basis, as being beneficiaries of this structural separation. Customers have already been subjected to a 25% increase in power bills under the CLP, and this is set to rise on 1 January.
We know the Utilities Commissioner has also approved around a 30% increase to the network tariff, and we are yet to fully understand the government’s plans as to how these increases will be passed on, as they are meant to be in place as of 1 July.
In the bush customers use power tokens to pay for their power through meters. People in the bush have also copped price increases, and the bush members of this parliament will tell you some stories about the impacts they have seen there. People have chewed through their power faster than expected and shops have sold out of power tokens due to demand. Everyone has borne the brunt of the changes, and despite the government saying nothing will change in the bush, current arrangements are only in place for another two years; someone has to ask what will happen after that. Who will bush customers be dealing with when it comes to power tokens and issues to do with their power? Will they be dealing with the Retail Corporation or the remote operations section of the Power and Water Corporation? These are more questions about the details of the split which seems to be still under way.
We know that most things tend to cost more in the Territory. Geographic isolation, a small and spread out population and rugged conditions mean there are challenges in getting goods and services at the same price as down south. We see it with groceries and petrol, as well as the production and delivery of electricity. To make sure Territorians can afford electricity and water, the government has paid a community service obligation to the Power and Water Corporation, which is then passed on to customers to help protect them being able to keep the lights on. It recognises the essential service Power and Water is and provides to the Territory. We need to hear details from the government around how the split of Power and Water and the creation of the Power Retail Corporation will impact community service obligations designed to help Territorians afford electricity, water and sewerage. These payments presently benefit every Power and Water customer, both urban and bush, and they help protect everyone from the enormous costs of producing and delivering power and water to help keep the cost of living down.
During this debate we need the government to confirm what its plans are in this area and as a future result of this structural separation. Will community service obligations be paid directly to the Power Retail Corporation to help keep prices down for customers, or will they be paying them to the Power and Water Corporation through its power networks or remote operations section, for example? How will the government handle this? Through the Public Accounts Committee we heard that external retailers find it challenging to compete in the Territory with the subsidies in place, but if the answer is removing them to facilitate increased private sector competition we have lost the game already, given the apparent purpose of this legislation and the split of Power and Water is to keep a lid on power prices. One has to ask if this will happen in reality, especially since the government has been unable to quantify this or show any evidence or forecasting on how this will work with tariffs for everyday households and businesses.
The government’s mantra about driving down power costs for everyday customers does not stack up. There is no evidence of financial analysis that Territorians have seen to show how this will work and impact on their bills. Staff within retail have little certainty going forward under their new arrangements as well. They have recently found out where their future lies within the retail and Power and Water Corporation and where their roles may have perhaps changed. Staff are currently under the Power and Water EBA, which expires next year; what happens after that? Working in retail is certainly not a cruisey job. They are on the front line, dealing with stressed customers trying to afford their bills every day. Staff deserve to know what is ahead of them, given retail workers will be subject to some of the most dramatic changes being driven due to the split, and their shared service arrangements will continue for some time.
They will have some of the most complex shared service arrangements in place, and this puts them in the higher risk box of something going wrong post 1 July implementation. Will staff who are most impacted – experts on the ground who know what is going on and what is not – have a voice and will they be listened to by new management and their boards? I hope retail staff are listened to throughout this change process, as well as customers who these changes will affect. There are also questions around the real cost of establishing the Power Retail Corporation. We know it will have a new board, chief executive, chief financial officer, branding, stationery and, eventually, new systems. We then have to ask what the real costs will equate to.
We heard at the Public Accounts Committee hearing that this year alone, Power and Water accounts the cost of the split to be about $2.2m; NewCo had $6.8m as an estimated cost. All of these costs were based on best case scenario estimates, and are still to be reviewed after the legislation goes through.
Will there be any transparency for Territory taxpayers regarding real costs, especially after the government rams this legislation through so it can say it is done and dusted, and it can reforecast its estimated budgets? What unanticipated costs will come up post separation? The government must tell Territorians what the split of Power and Water and the privatisation agenda is costing everyone; we will certainly be pursuing that at estimates.
The Power Retail Corporation Bill is one part of the structural separation agenda Territorians have had no say on. They have not been consulted on what they want to see with their utility, and this is another step towards privatisation in the Territory. This bill will create the Power Retail Corporation, and will not deliver cheaper power prices for customers in the long run. In fact, it is most likely power prices will continue to soar and put more pressure on the cost of living for everyone.
This aspect of the structural separation appears to be one of messiest, and staff and structures still have many questions ahead after 1 July. Again, I state for the record that the opposition will not be supporting this bill. Thank you.
Mr WOOD (Nelson): Madam Speaker, I thank the member for Wanguri for her hard work in dealing with this complex issue. I have a few minor questions to ask in my response. Why does the government want to allow, at some stage, RetailCorp to generate electricity? Is it because it wants it to operate as a company like any other? If that is the case, and you will allow RetailCorp to generate its own electricity, will you ask it to split again? This is my argument about the number of boards. If RetailCorp has a board, and it then buys generation, will you require it to split up so it is transparent as well? That is what you are doing with Power and Water, breaking it into three, so if RetailCorp decides it wants to generate electricity, does it have to do the same thing and have another board to run its electricity side? I am not sure.
I also wonder how far ahead we are thinking by saying RetailCorp will have the ability to generate electricity. Where will it get its funding, or what is the process for it to raise funds? It is not something that would be cheap. I am interested to know why it is there and how it will work in practice. The issue I think the member for Wanguri was hinting at in her contribution tonight was to do with the cost of the separation.
I would imagine the retail section is already a retail section. The member for Wanguri has much more experience in that area, and she will tell me that it also looks after sewerage and water. How will all of that work? What is the cost of separation? Will they work out of the same building? Will there have to be two completely different IT systems or will Power and Water as we know it, looking after sewerage and electricity, rent the IT system from RetailCorp so we do not have to buy a new one? After all, the system is already there. The system we have at the moment allows people to be charged for water, sewerage and electricity. Are we going to break that up? What are the financial and practical effects of that break up? That is something the government needs to answer.
The other interesting area concerns all of the huff and puff about bringing people into a competitive market and putting Power and Water on an equal footing with other industries in the energy market. Part 4, section 13 of the bill says RetailCorp is exempt from local government rates. What sort of level playing field is that? I am sure Origin pays rates. Why has the government decided to give itself, or one of its own government corporations, a freebie? That is not fair. If you believe it needs to compete on an equal footing, it should pay rates. It is not a charity organisation anymore. You are trying to turn it into a competitive organisation which is profit-based, even if it does not make much money. I see no reason why either GenCorp or RetailCorp should not be paying rates.
If they are taking over some of the facilities which Power and Water already has there is a certain amount of land which I am sure local government would appreciate getting some rates for. After all, we know there is a move by Power and Water to charge local government a fair bit of money for power poles. They never had much say in it the first place, but street lighting will be a very big expense for local government. It is not fair on local government that RetailCorp and GenCorp will be exempt from paying rates.
I raise those issues because I forgot that I had marked them down in the legislation for discussion. In case I do not get another opportunity, I also thank Mr Tregilgas and staff from Treasury; even though we might have a difference of opinion on some of these changes, they provided some briefings and spent a fair bit of time with the PAC answering questions, so I do appreciate all of that hard work. As I said before, I would have liked a few more hours with you to answer many more questions which needed to be answered.
I thought I would put on the record my thanks to Mr Tregilgas for the work he has done. So we do not have to go to the committee stage I will see if the minister can answer these questions as to why RetailCorp has the ability to generate electricity, how that would work, if we need another board, etcetera, etcetera and the funding and local rates issues as well.
Mr McCARTHY (Barkly): Madam Speaker, it would be remiss of me not to participate in this final debate, and it deserves an analogy from the equine …
Mr ELFERINK: A point of order, Madam Speaker! Can I assure the member for Barkly it would in no way be remiss of him not to participate in this debate.
Madam SPEAKER: Sit down, member for Port Darwin. It is not a point of order.
Mr McCARTHY: I will use an analogy around the equine species. The member for Sanderson, in his last contribution to debate, said he will fix the dead horse I am flogging. It is way beyond his bed time, and other members might agree on that. This is about a trifecta, and the Treasurer has nearly gotten to the booth to pick up on it because he has gotten three up tonight. Those three bets are major economic reforms which will change the face of the Northern Territory and its constituency. We will wait to see, because we have been told it is good medicine; it has been administered and the proof will be in the outcome.
The Treasurer is happy to go down this road, and it relates to a clear definition of policy between the government and opposition. The mantra of the government, which behaves more like an opposition than a government, is interesting; it says, ‘The Labor Party has no policies’. I remember when we hit Terry Mills and the CLP opposition with the same strategy, and it had nothing and floundered. However, what emerged was a glossy five-point plan and some very well-orchestrated media events around signing contracts in the bush and, bingo, it won government. We will not go into that long story, but it is interesting to see the government acting like an opposition and challenging the Labor opposition about having no policies.
We have very clear alternatives and the opportunity for policy development. People talk to us all the time, and this legislation is a hot debate in the constituency. I was in the bush on Monday, Tuesday, Thursday and Friday, and on Friday I had the opportunity to talk to a constituent who is a CLP voter, well and truly. That constituent told me they are not happy with the government. There are many issues, but they are backing the opposition because it has the opportunity to make changes. This constituent, one of yours, said to me, ‘I am going to back you guys right through because coming up to 2016 I want to see what you have to offer. You are our only hope because these guys have lost the plot!’
We will continue to monitor your legislative pathways, your governance and, at the same time, we will continue to communicate with the constituency, which is talking about you. We welcome that opportunity because this is policy development and the Territory will see clear alternatives articulated. In the meantime we will see how this trifecta pays out. You might collect the cash on the night, but we will see how the account holds in the future. It will be Territory families and businesses judging you accordingly. We have been told to trust the Treasurer. I am not putting money on it, but I will continue to monitor your movements, your legislation and the outcomes of what you are delivering for the Northern Territory and future generations.
I conclude by thanking the member for Wanguri, who has led the opposition benches through this very complex and challenging legislation. As a shadow spokesperson for the portfolio area there has been a lot of work done by the member and staff on the fourth floor. It has been a good experience to be walked through it and briefed, as well as the discussions around Caucus, all in the same room. The healthy political debate which goes on in those sessions and the learning which comes out of them – the member for Wanguri has done an incredible job and we have learnt a lot about having a clear policy alternative, a healthy debate and an opportunity to present that to the Northern Territory.
The Treasurer did not answer any of my questions in the last debate, he completely ignored me, went back to that lovely blue book we shared and quoted an economist. I hope he answers the member for Nelson’s questions this time around because I am interested in those answers as well. As far as my questions go I will take that back to that constituent, one of yours, who said they are putting their money on my horse because we offer real change. I will say sorry for not getting answers to all of the questions, but we will now watch, listen and learn.
Mr TOLLNER (Treasurer): Madam Speaker, I again thank and praise everybody who has spoken on this bill. I appreciate all of your comments and they have been extraordinarily interesting to listen to.
The member for Barkly is one of the great characters of this place; he always has an ability to amaze, and he did that tonight. He has nailed it; there is a clear policy debate now occurring between the government and opposition. I think the opposition’s policy, if I am wrong please correct me, is to do nothing, and that is fine. It thinks the current system is working great and it is nothing a few more taxpayer dollars would not fix, if that is what is required, but it wants to leave it as it is. It wants to leave the status quo, but on this side of the Chamber we are vying for change and it is that change which has caused this debate.
It is an interesting debate because the Northern Territory branch of the Australian Labor Party is showing itself to be somewhat different from its national masters, because its national masters were many of the drivers of these reforms across Australia.
Without doubt, in the last 20 years we have seen state and territory Labor governments advocate for this type of market reform to occur in their jurisdictions. I talked earlier today about the COAG energy ministers, and everybody had a bit of a chuckle because we know there are only two Labor energy ministers on COAG at the moment. The majority of them are conservative ministers, but it was not too long ago that almost exactly the opposite was the case, and the COAG energy ministers never changed their spots at all in relation to this debate. They stuck true and it was a reform which has received bi-partisan support around Australia for the last 20 years. Part of the strength of these reforms has been the bi-partisan nature of them.
That shows a sign of maturity in the Australian political system. It is too bad in the Northern Territory that we have a Labor opposition which wants to play funny political games with something like this, advocating a ‘do nothing’ policy, but that has not been the case in any other jurisdiction in the country.
Most recently the former federal Labor Resources and Energy minister Martin Ferguson put out an energy white paper just before Labor lost the last election. I recommend that white paper to members opposite. See what your national energy policy actually is because you might find the Territory Labor Party is out of step with its national masters.
The member for Nelson raised some issues, one of which I was not aware of, and I am glad he did. Firstly the retail business cannot generate electricity for five years. That is because we want the market to establish somewhat before we allow the retail and generation businesses to merge, any generator to start selling electricity or retailer to start generating electricity.
The bit of information I was not aware of was the rates exemption. I have been informed that PWC has never paid rates, and pays what is called ‘tax equivalents’. That is the equivalent of what it would pay in rates. The only difference is it does not go to local government but to the Northern Territory government. In another debate at some stage I might put my Local Government minister’s hat on and try to rectify that situation, but in answer to that question about why it is these new companies will not be paying rates, it is maintaining the status quo that PWC set in paying tax equivalents rather than rates. As Treasurer of the Northern Territory, it is fantastic it is paying tax equivalents. As Local Government minister I possibly would like to see local government strengthened. It is an interesting situation.
Member for Barkly, this will not be the last debate. This is the start of a process; your analogy with horse racing is an interesting one because the winner has not crossed the line. I am big enough to acknowledge that, and there are a few things yet to happen before we have a true energy market.
I would like to see the AER operating in the Northern Territory; there must be legislation for that and my hope is it will be in position by 1 July 2015 to take over from the Utilities Commission. However, there is still a bit of work being done behind the scenes by the Utilities Commission, Treasury and the AER. This is being clouded by almost a national demarcation dispute between the ACCC and the Department of Industry, if you want to get down in the mud with these things. The AER is a little complicated at the moment because there is a turf war going on between Treasury, which looks after the ACCC, and the Department of Industry, but I was assured last week that it is being sorted out very quickly. The AER is keen to take over the regulatory role, but there is a transition which has to occur and it will require legislation. You have not heard the last of this issue, member for Barkly.
What will also be a test for these reforms is the introduction of competition, particularly in the generation area. There is some interest in the Northern Territory, but I am also aware of the concerns of those interested that we may not get there in having a truly competitive marketplace. If that situation ends up occurring we may not get competitors, but this is a start towards having a genuine electricity market operating in the Northern Territory. As I say, the Australian regulator is yet to get on board and, similarly, we have not seen any generator sign on the dotted line and reach financial closure yet in order to set up in the Territory. I hope that will eventuate.
I understand there are some members who have genuine concerns; I do not think everyone is playing silly political games. I ask you to trust in the government, trust in governments around Australia and trust in the Australian people to make wise and informed choices. An enormous level of work has gone into these reforms nationally. All the heavy lifting has been done for the Northern Territory by other jurisdictions, and we have seen these systems trialled in every state and territory around Australia.
I note people have talked about Western Australia a few times tonight, saying its system is a bit stuffed. It is, but it has tried to create its own system. It does not have the Australian Energy Regulator, it did not try to model itself on the National Electricity Market and has pretty much gone out on its own. We are not doing that in the Northern Territory; we are adopting National Energy Market rules and are trying to replicate that. It may well be 50 or 100 years before we see a power line going into the grid, but we will have the same rules, and that inspires confidence in the marketplace.
Australia has one of the best energy systems in the world without a doubt, and much of that is because of the hard work of others who have gone before. For that reason I am more than happy to commend this bill to the House.
A bunch of people should be thanked, including Alan Tregilgas, Craig Graham from Treasury and John Baskerville, to name three very important people. A number of people behind them have provided assistance and support as well.
Motion agreed to; bill read a second time.
Mr TOLLNER (Treasurer)(by leave): Madam Speaker, I move that the bill be now read a third time.
Motion agreed to; bill read a third time.
ADJOURNMENT
Mr ELFERINK (Leader of Government Business): Madam Speaker, I move that the Assembly do now adjourn.
Motion agreed to; the Assembly adjourned.
VISITORS
Madam SPEAKER: Honourable members, I advise of the presence in the gallery of two Year 5/6 classes from St Paul’s Catholic Primary School, accompanied by Louise Peyton, Phillipa Pond, Dee Hicks and Jo Ryan. On behalf of honourable members, welcome to Parliament House, and I hope you enjoy your tour and time here.
Members: Hear, hear!
STATEMENT BY SPEAKER
Swearing in of New Member for Blain – Photographs
Swearing in of New Member for Blain – Photographs
Madam SPEAKER: Honourable members, I have given permission to Sky News, Channel 9, ABC, a private photographer and the NT government photographer to cover the swearing in of the new member for Blain.
RETURN OF WRIT
Division of Blain
Division of Blain
The CLERK: Honourable members, I lay on the table the writ issued by Her Honour the Administrator, Ms Sally Thomas AC, on 16 April 2014 for the election of a member for the electoral division of Blain on 12 April 2014, and certifying the election of Mr Nathan Barrett.
Mr Nathan Barrett made and subscribed the oaths required by law.
Madam SPEAKER: On behalf of members of the Legislative Assembly of the Northern Territory, I congratulate you on your election and welcome you to the Assembly as the member for Blain.
Members: Hear, hear!
MESSAGE FROM ADMINISTRATOR
Message No 15
Message No 15
Madam SPEAKER: Honourable members, I have received Message Number 15 from Her Honour the Administrator notifying assent to the bills passed during the March sittings. The message is dated 28 April 2014.
LEAVE OF ABSENCE
Member for Nightcliff
Member for Nightcliff
Mr GUNNER: Madam Speaker, I move that a leave of absence for today, tomorrow and Thursday be granted to the member for Nightcliff on account of personal matters.
Leave granted.
Mr ELFERINK (Leader of Government Business): Madam Speaker, I seek leave, whilst there is no question before the Chair, for the member for Blain to make his inaugural speech in the Assembly for no more than 20 minutes.
Leave granted.
VISITORS
Madam SPEAKER: I welcome to the Speaker’s Gallery Mrs Rebecca Barrett, the wife of the member for Blain; master Micah Barrett; master Amos Barrett, Miss Isobel Barrett - the children. I also welcome David and Jessica Barrett, the parents of the member for Blain; Mr Ian Fleming and Mrs Kym Fleming, the parents of Rebecca Barrett; Mr Barry Coulter, a former member and Deputy Chief Minister of the Northern Territory Parliament; and Mr and Mrs Bob and Suzanne Cavanagh. Welcome all.
Members: Hear, hear!
INAUGURAL SPEECH
Mr Barrett – Member for Blain
Mr Barrett – Member for Blain
Mr BARRETT (Blain): Madam Speaker, I begin by thanking those who have been a great support to me in my life generally, and, more specifically, in the recent Blain by-election.
I thank my family, starting with my parents, David and Jessica, who are here today. They are long-term Territorians and instilled in me a devotion and commitment to serve people and to be visionary in my outlook on life. Thank you to my wife, Rebecca, who is my best friend and confidant, my children and my extended family, who are also here today.
I publicly thank my campaign team for all of its hard work, planning, support and advice given during a tough campaign. I especially thank Barry Coulter and Terry Mills for the legacy they have left, their support for me as I move forward in this journey and continue to work for and serve the people of Blain.
I thank the volunteers and other supporters who gave time, effort and often prayers throughout the campaign. They believed in me as a candidate, and the plan the government has for the future of the Northern Territory.
I thank the people in the electorate of Blain for their support. Without them, I would not have the honour of standing here today. To them, I pledge that I will serve the community and the Northern Territory with my heart, mind and strength, so help me God.
I am very proud to have the opportunity to serve my community and the Northern Territory. I was born at the other end of Mitchell Street from where we are now, the site of the old Darwin hospital. I grew up in Darwin admiring people who represented the Territory in sport and other capacities, be it Teal Cup teams, Pan Pacific Games competitors or political representatives. I often wished I could do something for the Territory and proudly wear the colours of the flag, black, white and ochre.
After completing high school at Kormilda College, I went on to complete qualifications in economics, science, education and finance. I have a range of employment experience in education, small business, finance, governance and logistics. I have learnt a great deal from these experiences in my life, and all of these now dovetail as I embark on this new adventure. I have been given the opportunity to do my part, try my hardest, give it all for the successful future of the Territory, and as they say in football, ‘to leave it all on a field’.
This opportunity eclipses what I dreamt of as a young lad, watching my peers take the field to represent the Northern Territory in sporting events. It allows me to be a part of something greater in framing our future.
I do not believe there is anything amazing about me. I am not the smartest or strongest, the most skilled or qualified. I certainly do not stand head and shoulders above my colleagues, as they are all pretty tall. I was asked if I knew how Wicking would draw me. I replied that he has been drawing me for weeks, but I was too short and did not manage to get into the frame. I believe in integrity, justice, mercy and humility, and whatever grace has been given to me, I will use to serve.
I have a very strong connection with the Northern Territory; the landscape amazes me. I am blessed to have had the experiences I have had, be it long, flat roads in the Barkly, the stunning colours of the Centre, fishing at Goulburn Island, the floodplains in the north, the smell of rain in the Wet Season, the brilliant lightning storms and sunsets and its wildness and harshness, the very paradox that makes the Territory both formidable and beautiful.
It has many wonderful characters that make it a very special place, the people who have made the culture of the Northern Territory so unashamedly and proudly unique. It has Indigenous people and their culture that I came to learn about, not from the popular culture of our day, but from Kormilda College. I made lifelong friendships and saw Indigenous culture and people as accepting, kind and friendly at heart. My time at Kormilda changed my perception from being afraid to being a friend.
Immigrants have come from all over the world, like my mother and her family. If we look from A to Z, from Afghans who came out with camels to transport cargo across the desert – which is why the train that comes to Darwin is called the Ghan – to Zimbabwe, from where we welcome people looking for a new start, and the Asian cultures that bring colour and flare to the Northern Territory. The keen historical mind will note that when supply ships came to the Top End from Adelaide, laden with food for the fledging town, they were occasionally shipwrecked on the Western Australian coast. It was Asian people from Indonesia, Malaysia, Timor and China who saved the town on more than one occasion, because they were the only ones growing food. The southern European cultures, predominantly from Greece and Italy, brought more diversity with hard work, humour and optimism, not to mention Greek Easter and the Glenti. These cultures were infused into the Northern Territory in that most people who grow up here learned Greek words at school that are now a part of our vernacular. Together, all of our cultures have created the amazing culture that is the Northern Territory, but that does not mean it is without its problems.
Our past is not without bloodshed and tragedy as our cultures collided, and I believe we are still healing from our past. Wrongs have been done to our brothers and sisters, and this legacy remains in the collective psyche of our Territory. War, cyclones, floods, fires and droughts have often been the furnace that forged people together and created a kinship that underpinned unity.
The city we stand in today has been devastated three times, twice by cyclone and once by war. Three times, it has gotten back up, picked up the pieces and reinvented itself. That is a reflection of people across the whole of the Territory, who have a goodness about them. The heart of the Territory is one that beats for a future. It is one that sees potential and wants to realise it, can take setbacks and still have the determination to move through. My heart beats in time with hers.
The electorate of Blain has people from the whole spectrum of culture that is the Northern Territory. It is with the history of our Territory in mind, and with great pride and humility, I now begin to serve the people in this capacity.
In the electorate I am working on a Food for Life program in Moulden, hand in hand with community groups, council, businesses and government institutions to build a sense of community and help those who need it to get up, go again and move forward.
In Woodroffe I am working with the community, sourcing new options to utilise community purpose land that will add to the amenity of the community. In Rosebery and Bellamack I am working with community groups to give wings to their visions for more community events that bring people together to enjoy the environment we live in, and to make connections between neighbours we hope will create relationships and community spirit.
I have met with school principals and want to support them in any way I can to showcase the excellent job they do. I am excited by the visionary direction principals in the Palmerston area are taking to reframe the community, encourage belonging, fight the very destructive forces of self-pity and a victim mentality, give students more than education, with connections to traditions of our past and a sense of who they are in our community, give them a cause to rally for a future beyond themselves and raise their eyes to see opportunities to help others in the community.
Having met with police, I am committed, as they are, to ensuring people can enjoy living in Palmerston without the fear of crime and antisocial behaviour. As Barry Coulter and Terry Mills before me, I am committed to building the physical and social infrastructure necessary to ensure Palmerston continues to be a great place to live. In different ways both of these men are an inspiration to me, and I understand I have big shoes to fill. With my Palmerston colleagues, Lia Finocchiaro and Peter Chandler – who have also been inspirational me – I am excited about taking the city to the next level. We will do this together as part of the Country Liberals plan to develop northern Australia. We have the scope and ability to see the Northern Territory closer to achieving its potential to build on our strengths and improve our weaknesses.
Strength, unity and purpose are the keys to success in most things. Strength and unity without purpose is pointless. Like a fortress that guards nothing, it is strong, tight and formidable, but has no reason to exist. Strength and purpose without unity will fail because a team of champions will always be beaten by a champion team. Individuals in a football team who can rise above themselves and put the goals of the whole club and fan base above their own, and do all they can together for the realisation of those goals, will always operate to their highest potential.
Purpose and unity without strength will fail because it cannot move forward. It is like a great idea with no vehicle to activate it; it is the toothless tiger, the committee with great ideas and no authority to execute change.
The political events that occurred in the Northern Territory during and at the conclusion of the Blain by-election affirmed this government with the strength of numbers to move forward. It is now unified in that members of this government are able to build teamwork, to work with and for each other and the people of the Northern Territory as a whole to realise our potential. It is now able to move forward with a purpose and plan to develop northern Australia. May we use this strength, unity and purpose with great wisdom.
A cursory look at the Northern Territory’s history will show the mining and pastoral industries, as well as the public service, have been the main drivers of development. I am excited we are situated in a prime location and time to take advantage of our proximity to a developing Asian market.
We must learn from the mistakes of the past and move forward, adding health, education and agriculture to the mainstays of the Northern Territory economy. We must have the audacity and tenacity to be visionary, see the path and mark out steps towards health facilities that reach across the top half of Australia and into Southeast Asia, a health sector that affords the best care for all and a model of innovation and excellence that breaks the paradigms of the past.
We must learn from mistakes like the Adelaide River floodplain rice project, and not quit, saying, ‘Agriculture cannot work here’, but intelligently develop agriculture industries where we have a natural advantage of soil type, water resources and proximity to markets in Asia with expanding demand.
We want to have an education model which attracts students across the whole region, encourages innovation in industry and fosters improvements in industries we have, making the Northern Territory a leader in those industries. We want to develop our cattle industry and export potential for access to markets in Asia, encouraging innovation and improvement in the industry to maximise our competitive advantage. We also want to encourage mineral resource development and innovation in extraction and processing that will create opportunities for employment and model best practice in our mining and oil and gas sectors.
What if students in the Territory were able to make advances in our industry processes because we encouraged innovation to build into them a sense of their responsibility – to move their world forward and not sit back assuming entitlement. What if they had an ingrained desire not to take but to contribute, and to know they must take responsibility for forward movement, not just sit back and assume it will all happen around them – to do hard things like the NTU solar car team that developed a more efficient electric motor, like Dr Ben Hoffmann, who identified that ants can be used as environmental indicators, and to take risks, like our young businessmen and women who are acting on their ideas and creating businesses and employment in the Northern Territory.
This sort of thing does not just happen. Innovation is like an arrow. Our innovators are like the point; they have a hard, sharp edge and want to hit a target, but a point needs the body or shaft of the arrow. These are the structures we put in place to facilitate their ideas. The feathers at the back provide direction, and this is where advice is important, not naysayers, but people who will guide their ideas to see them happen. Innovation needs the whole system to work. Using our natural resources, our strategic location and our human resources, we have an opportunity to advance the future for our children with jobs that have meaning and a lifestyle that becomes the beautiful Territory we live in.
I am heartened by the federal government’s realisation that northern Australia must be developed. It is my hope that in this place, at this time, on our watch, we do everything we can to promote the future, encourage ideas to set up structures that assist innovation, growth and development, and provide guidance for those ideas. Nothing unites people like a cause, and I am excited to be part of a government which can provide the vision and purpose the Territory needs to move forward. I am excited because there is a wisdom that shows serving and leading can be the same thing. I am excited to have this opportunity to serve by leading and to lead by serving.
Thank you, Madam Speaker.
SUSPENSION OF STANDING ORDERS
Debate Public Accounts Committee Report on Power and Water Legislation
Ms LAWRIE (Opposition Leader): Madam Speaker, I move that so much of standing orders be suspended as would prevent this House from debating the Public Accounts Committee report into splitting the Power and Water Corporation. I will talk to my motion to suspend standing orders
Mr Elferink: Madam Speaker, is she not supposed to seek leave at the outset?
Madam SPEAKER: Opposition Leader, are you seeking leave to suspend standing orders?
Ms LAWRIE: I am seeking leave to move that so much of standing orders be suspended as would prevent this House from debating the Public Accounts Committee report on splitting the Power and Water Corporation, and I speak to the motion to suspend standing orders.
Madam SPEAKER: If you are seeking leave to suspend …
Mr Elferink: It is not a motion. She is seeking leave.
Ms LAWRIE: No, I am moving to suspend standing orders. I am not seeking leave.
Mr Elferink: You must seek leave.
Madam SPEAKER: Member for Port Darwin, please be seated. Opposition Leader, you must seek leave. Are you seeking leave to suspend standing orders?
Ms LAWRIE: Yes.
Leave not granted.
POWER AND WATER CORPORATION LEGISLATION AMENDMENT BILL
(Serial 63)
(Serial 63)
Continued from 13 February 2014.
Ms MANISON (Wanguri): Madam Speaker, it is a shame the government has decided to push through these bills today without allowing the Public Accounts Committee process to be completed by finalising its report, after what has been an incredibly rushed process already. The report could have been put before the parliament for more scrutiny and to show transparency in regard to these bills. The government does not have the grace to allow the Public Accounts Committee to do this and is ramming through this legislation today.
It is a shame. You will not allow debate on it either. Given the government is not allowing the process to be completed and we are here today, having to go into the bills …
Mr Vowles: What are you running over there? It is unbelievable.
Mr DEPUTY SPEAKER: Can we have a bit of order on the opposition side? You are already on a warning, member for Johnston, as is the Opposition Leader.
Mr Vowles: No, I am not.
Mr DEPUTY SPEAKER: You are now.
Ms MANISON: I will respond to the Power and Water Corporation Legislation Amendment Bill and the changes to the Government Owned Corporations Act before the Assembly.
I will be upfront and clear in outlining that the opposition will not support any of these bills to split Power and Water, or the changes to the Government Owned Corporations Act. We stand united; this is not in the best interests of all Territorians. It is part of the government’s thinly veiled privatisation agenda for Power and Water.
I will speak plainly; every member of this Assembly has an interest in this debate and the government’s plan to split Power and Water. This will not deliver cheaper power, water or sewerage for any Territorian. Experiences elsewhere show this will drive up the price of power, water and sewerage for everyone.
This will not mean increased reliability of services for Territorians. It is well known that when structural separation or privatisation takes place, investments in repairs, maintenance and infrastructure decrease. This means more blackouts, more water outages and more issues for everyone. This will mean a reduction in the number of staff working at Power and Water.
The Treasurer’s said earlier this year on ABC radio:
- It would be my expectation that there will be reductions in staff numbers.
By his own words, The Treasurer has confirmed that he expects staff cuts as part of structural separation, which will put more pressure on the hard-working staff at Power and Water, and increase their workloads. The changes to the Government Owned Corporations Act before the Assembly will give the shareholding minister of Power and Water, the Treasurer, access to a raft of new powers which will enable him to sell or transfer assets of part or all of government owned corporations.
This bill seeks to give the shareholding minister power, by regulation, to transfer assets of Power and Water Corporation, the Power Generation Corporation or the Power Retail Corporation as he pleases.
He will not even have to bring it before parliament for scrutiny. Most disappointingly, like the move to split Power and Water in the first place, the changes to the Government Owned Corporations Act will mean the government does not have to consult with Territorians. The shareholding minister can transfer Power and Water assets with a simple tick and flick.
If this bill passes today, we are on the road to the sale and privatisation of Power and Water assets currently owned by Territorians. These bills before the Assembly are an attempt to structurally separate Power and Water Corporation as it exists today, to strip out two components from the current corporation that have potential for private sale due to their capacity to run profitable margins and attract buyers, that is, stripping out the generation division and its valuable assets and the major contestable customers of the retail section within the Power and Water Corporation.
Left within the Power and Water Corporation will be sections which do not have the same capacity to drive profits. The power networks section, water services, corporate services, system control and remote operations – which services Indigenous Essential Services – will stay together within the Power and Water Corporation monopoly. The gas section will also remain there to start with, and I will touch on that later.
There have been questions about how this will impact bills and power token costs for people in urban centres and the bush. The Treasurer has made it clear numerous times in the media, and in the Chamber, that he wants Power and Water to work like a profit-driven commercial business. In a media interview one year ago, he said, ‘The situation is Power and Water are selling electricity for cheaper than they produce it and we are pouring enormous amounts of government money into Power and Water, subsidising people’s electricity right across the Northern Territory. There is a misconception out there that it is only the remote people and seniors being subsidised. The fact is, all Territorians are.’
He went on to say, ‘When you are selling a product at a lower price than you are producing it for, government contributions continue to increase in order to maintain that business. Something has to be done.’
On May 14 2013 in this House, the Treasurer gave a response to a question about the commercial sustainability of Power and Water. He said:
- It is appalling that the Power and Water Corporation is selling power for less than it is producing it.
- We are doing everything we can to improve its efficiency to ensure it operates at least as efficiently as any comparable business …
In this Chamber, over time, the Treasurer seems to be coming clean about what the government intends to do to Power and Water. In this Chamber in December he said:
We are on the record saying we are not interested in privatising any Power and Water Corporation assets this term. We would not do so without a mandate of the people, and we are not seeking such mandate.
But in February 2014, the Treasurer performed a huge backflip, and this sheds light on the true intent of this bill. On 11 February, when asked important questions by the member of Nelson about the future of Power and Water, he said:
- It is a good question about the privatisation of assets, because this is something we need to think about in the future.
- We should not be ruling out the sale of assets …
The CLP government is following the tried, tested and failed model of many other jurisdictions. It is the pathway towards privatisation. Despite the denials of government, its language on the issue seems to be changing as we get closer to the breakup of Power and Water. The government chooses its words carefully about whether it is selling the Power and Water Corporation and the new Generation and Retail Corporations. However, one only has to look at last Saturday’s NT News, and listen to some of the responses to questions asked today in relation to the sale of assets to see it. It is clear future assets are on the agenda in the Territory.
The government presented three bills to parliament during the February sittings to split the Power and Water Corporation. It initially tried to put these bills through together, which would have severely limited parliament’s ability to scrutinise what was before us. Thankfully at that time, and thanks to pressure from the opposition and the Independent, the government agreed to put these bills through separately.
However, if the government had its way, these bills would have already passed in March, based on its strength of numbers. Due to internal unrest and chaos, and an unexpected by-election in Blain, these bills have had to wait, rather than being rammed through during the last sittings with minimal scrutiny. The Public Accounts Committee, with its new power of self-referral, has a chance to hold an inquiry into the bills before us. However, this process has been incredibly rushed, driven largely by this government’s determination to separate Power and Water and ram these bills through with as little scrutiny as possible.
The process of the Public Accounts Committee did not leave me feeling any more confident these bills are the way to go. It highlighted what a rushed process this is and the massive deficiencies in this legislation. Today we are debating these bills in the Assembly, before the PAC process has been allowed to run its course and before we have put the PAC report of its findings to parliament for debate. It is a disgrace that the government is still going forward and ramming these three bills through parliament today without allowing that PAC process to be finished.
It was hard to believe the Power and Water Corporation, Treasury or NewCo, the key agencies processing these changes by government, were unable to show the Public Accounts Committee any evidence these changes will benefit Territory businesses and families. No one could provide any cost-benefit analysis, risk analysis or evidence to show any quantifiable benefits to Territorians. No evidence at all could be presented in these areas. It was clear the work had not been done. There is no evidence to support that this is the right path to be following regarding the future of billions of dollars of Territory infrastructure and investment.
However, these bills do make it somewhat clearer as to why the government is heading down this path, with no evidence or analysis to back up any tangible benefits. What we are debating also includes significant changes to the Government Owned Corporations Act, which will provide the minister with unfettered powers to transfer the assets of the Power and Water Corporation to other entities. These changes alone should constitute their own separate debate, but the government has incorporated them into this bill with the Power and Water Corporation Act.
The minister’s second reading speech is silent on the significant amendments to the Government Owned Corporations Act. Honourable members can draw their own conclusions about that omission.
There are significant changes to the Government Owned Corporations Act which give the shareholding minister, the Treasurer, the ability to transfer assets within a government owned corporation, or even an entire government owned corporation itself.
This leaves the soon to be established Power Generation and Power Retail Corporations looking vulnerable. The changes to the Government Owned Corporations Act look to insert section 53A, which gives the shareholding minister a raft of new powers. Under proposed section 53A there is a definition of what a relevant entity is, which includes:
- (a) a government-owned corporation;
(b) a subsidiary;
(c) a statutory corporation;
(d) a corporation (as defined in the Corporations Act 2001) or other body corporate that is owned by the Territory;
(e) the Territory.
Why does a relevant entity need to include a subsidiary? Why must it include a statutory corporation? Why does it include a corporation as defined by the Corporations Act or any other body corporate? It begs the question: why is the government seeking such broad capabilities to transfer Power and Water assets?
Under proposed section 53B there are some clear powers given to the shareholding minister to transfer assets to relevant entities. It says:
- (1) Regulations may be made under this section for the purpose of effecting the transfer of all or part of the business of a Government owned corporation to a relevant entity.
(a) transfer all or part of an asset or liability of a Government owned corporation or a subsidiary to a relevant entity;
This legislation is effectively giving the government a blank cheque to do as it pleases with the assets of Power and Water Corporation, as well as the Generation and Retail Corporations.
Under proposed section 53T there are ministerial directions inserted which further support the minister having the ability to direct the government owned corporations as he pleases. Proposed section 53T reads:
- (1) The shareholding Minister for a Government owned corporation may, in writing, direct the Government owned corporation to do anything that
the Minister considers necessary or convenient to be done for the purpose of:
(a) facilitating the making of transfer regulations; or
(b) preparing for the transfer of business that is to be effected by the transfer regulations; or
(c) giving effect to the transfer of business.
(2) The direction may require the Government owned corporation to do something that it could not otherwise lawfully do.
(3) The Government owned corporation must comply with the notice.
What would remain within the Power and Water Corporation is essential to every Territorian. Power and Water services are essential to all of us, our communities and the growth of the Territory. Yet the government is going down the path towards privatisation and this, ultimately, means less reliable services and higher prices for customers.
There is a fundamental difference in how we see Power and Water compared with the views of those opposite. We see it as an essential service. We see it as a service all Territorians are entitled to have access to at an affordable price. We believe the staff of Power and Water work hard, take a lot of pride in their work and know what they are doing is essential to all of us. We value and respect those workers and the skills and professionalism they bring.
The Treasurer and some of those opposite see the Power and Water Corporation as a basket case. They see it as inefficient and bloated. They call it a dog’s breakfast. The Treasurer believes Power and Water has too many staff, and they have too much equipment to do their job. The Treasurer expects the breakup will mean a reduction of staff. He has no appreciation of how hard people work at Power and Water. He also knows fewer staff will mean less reliability of services for everyone.
Within the new look Power and Water Corporation the government is proposing to leave water services, power network system control, gas, corporate services and some aspects of the existing retail section within this government owned corporation. There will also be the remote operations section, which services Indigenous Essential Services and provides the vital power, water and sewerage services to remote communities, which will stay within the Power and Water Corporation.
These changes to our essential services provider are being rammed through with no mandate from or consultation with Territorians and no real proof to show anyone we will be better off as a result. There is no evidence or report to show Territory taxpayers how breaking up Power and Water will make the service better, more reliable or more affordable. This is a government hell-bent on following the road of privatisation and selling off what it can. It is in its DNA. It is quite happy to sell what it can and has made that very clear.
We have heard its federal counterpart, Treasurer Joe Hockey, is placing more pressure on jurisdictions to sell assets, and Treasurer Tollner has signed up to that. Only last week we saw the Chief Minister sign up to that agenda with his COAG colleagues. Following on from that, it was very interesting in Question Time today to hear him place on the record that the government is not ruling anything in or out, and he is looking forward to the ongoing debate on the sale of assets.
In Saturday’s NT News the Chief Minister said asset sales should be looked at. He said:
- … there are clearly no plans to sell any part of Power and Water at this stage.
I repeat the last part:
- … at this stage.
To members opposite who do not believe the split of Power and Water, and this legislation in particular, is about a privatisation agenda and heading down the road of selling Territory-owned assets, my message is simple: wake up! It is what it is all about, and this bill will enable the government to privatise Power and Water. This will mean higher power prices and less reliability for your constituents. The agenda is very clear; those who do not believe it need to take their heads out of the sand.
As stated earlier, in the Territory Treasurer’s rhetoric we have also heard his desire to make Power and Water run like a commercial operation. Under structural separation there will be business divisions left within the Power and Water Corporation which may not be as lucrative as generation and some of the big retail customers, but are essential to every household, business and the quality of our lives.
In March we saw what happens when there is a major problem in power networks and system control when the lights went out in the Darwin and Katherine region. A large part of the Territory ground to a halt that day. Businesses lost stock and trade, people lost wages, schools and childcare centres closed and the public service was not operational. Everything was impacted. It was a stark reminder to us of what happens when the power goes out and why it is essential we continue investment in infrastructure to ensure reliability for customers.
One must question whether investment in Power and Water will continue at the same level. Will the repairs and maintenance program continue at the level we need it? Fewer repairs and less maintenance means more outages for customers, lost trade and lost business. Staff are at risk when they go out on the job and are dealing with faulty equipment. The CLP has already stripped money from repairs and maintenance. In 2012-13, Labor had forecast a repairs and maintenance budget of $87m for Power and Water.
After the CLP took power, the spending reduced to $80m and we now see it at $78m. This is a worrying trend and something which must be carefully monitored through this splitting exercise. Less investment in the Power and Water Corporation will ultimately mean less reliability of services to Territorians. It is also concerning to hear internal training programs have been scrapped under the CLP. These were designed to help staff deal with the highly complex, and at times, highly dangerous, nature of their jobs.
One aspect of this bill I am concerned about is the government’s level of commitment to the quality of power, water and sewerage services delivered to remote communities through Indigenous Essential Services and the remote operations section of the Power and Water Corporation. People in the bush have already shared skyrocketing increases to the cost of power. All Territorians have shouldered the increases together - the urban centres and the bush - and prices will not become any cheaper under the structural changes proposed today.
In the Territory, in recognition of the fact power, water and sewerage are essential to every one of us, we have had a long-term policy of honouring subsidies to make electricity, water and sewerage services affordable. This means people have been protected from the real costs to receive those essential services. In the Territory we have unique challenges in delivering services. Much like the cost of petrol and groceries, the large distances, small population and isolation makes things more expensive to deliver, and the case in remote communities goes to a whole new level.
The government has tried to calm the bush and its Caucus members by telling them there will be no changes to Indigenous Essential Services, which will help keep the price of power and water at a more affordable level. In Question Time today we asked questions with regard to a $5m to $6m shortfall, and we know existing arrangements in place for Indigenous Essential Services are only there for another two years. In two years’ time, what will happen to power, water and sewerage prices in the bush? What will happen to repairs and maintenance in two years’ time, and what will happen to future infrastructure investment?
There is no certainty going forward, and the structural separation will strip money from Power and Water Corporation, leaving more pressure than ever before on community essential services. We have a growing population in remote areas. Plenty of babies are born each year and numbers are growing in the remote communities. This means we cannot drop the ball and lose focus in remote essential service delivery and infrastructure. There has been significant investment in upgrading infrastructure in recent years, but there is much more to do and not all communities have benefited from changes.
Under the changes to Power and Water, will the government continue investing in remote community power, water and sewerage to ensure people in the bush receive the services they need and deserve? When Power and Water continues to have tight budgets in the future, will the government make remote community essential services a priority, or will work in places like Ramingining, Palumpa and Yuendumu be put into the too hard basket? I cannot see how people in the bush will benefit from the split; it will mean they pay more for power and see less investment in their essential services infrastructure in the future.
The structural separation is not anticipated to attract competitors in the bush or have any benefits for people there.
The power networks division is a critical part of the Power and Water Corporation and one of the sections facing the greatest challenges due to ageing equipment and infrastructure. After the events of the Casuarina Zone Substation incident, we learned it is best to be open, accountable and transparent when things go wrong to prevent them happening again.
After the events at the Casuarina Zone Substation and the findings of the subsequent Mervyn Davies report, a strong investment in power networks infrastructure followed. Under the changes the government is ramming through with the breakup of Power and Water, any private retailers or generators will still need to access the networks infrastructure. The government has claimed that having a monopoly over the power network is the key component of the new look Power and Water Corporation being able to make money. It has succeeded in putting up prices in the networks tariff increase, and the Utilities Commissioner has now handed down the networks price determination. Approximately 30% of the networks tariff has been approved, and this will be in place from 1 July.
In Question Time today, the Treasurer was asked what that will mean and if those costs will be passed directly on to the customer as of 1 July, and about how they will find the required funding and subsidy for that. We were not given an answer, or any indication as to how the government plans to deal with that issue. It would be nice to have some information on the record about what the government is doing to deal with the network price determination before us.
Given the age and size of the distribution networks, it is one of the areas which requires most investment. If the government does not address networks issues like the ones we have seen recently, it will not matter how many generation providers or retailers you have; we will all be left in the dark.
It is essential that investment in power networks to continue repairs and maintenance programs and the upgrading of infrastructure is done as required and needed. The government has already set a worrying pace with the reduction in R&M spending at Power and Water. Given it is stripping out generation and retail at Power and Water Corporation, there will be a reduced ability to access revenue to fund power networks.
We have not seen any financial modelling or cost-benefit analysis of how structural separation will benefit power networks. No matter how many retail-owned generation competitors you have in the market, if the network goes down everything will fall apart. There needs to be strong, continued investment in the distribution network, and we need an ongoing and sustained commitment to this. We also need an ongoing and sustained commitment to staff within power networks and system control, and the training they deserve as part of their highly dangerous and technical jobs.
The structural separation on the table also has elements of shared service provision between the new Retail Corporation and the Power and Water Corporation. Shared service provision: staff subject to the changes have only recently been told what is happening at Power and Water, and management has told us everything is looking rosy ahead of the 1 July implementation of structural separation.
When you talk to people in Power and Water affected by the changes you do not get the same story. They will tell you people have their heads down and morale is at an all-time low. They see the changes in the split as unnecessary, and driven by a shareholding minister for his own reasons.
Power and Water’s senior management and chair have been very clear they are implementing and following the will of government and will not comment beyond that. It does not come across that there are many glowing supporters of the changes.
It will be interesting to watch the transition from June 30 to July 1 and see how the planned shared services arrangements between the new GOCs and Power and Water operate. It is clear staff have had to do a lot of work, planning and preparation for this from within Power and Water. As we all know, issues are not always anticipated. Within these changes, the future of system control and the gas unit has also not been determined. Documents state that once Territory wholesale electricity market arrangements are open to third party retailer generators, the power system control function will be separated from the monopoly GOC and, subject to Cabinet approval, the gas purchasing function will be separated from the monopoly GOC.
It will also be interesting to see what happens to the gas unit within Power and Water which secures and contracts to purchase gas. Will separating it from Power and Water in the near future mean gas that was secured for Territorians is sold as another short-term cash-grab without the long-term interests of the Territory in mind? That will be another space to watch with this split.
As we recently saw with the system black outage in the Top End, system control needs more support. Staff need more training and access to resources to help them with their complex and often stressful jobs. Alarmingly, tier training had already been cut from them under the CLP.
Given the government intends to remove them from Power and Water entirely, it will be of great interest to see what support and investment it puts into system control going forward.
I am also keen to know if affected Power and Water staff will have much say on their future. At the Public Accounts Committee hearing, Power and Water Corporation representatives confirmed that, as of today, it has 1053 full-time employees. I would like to break this down to put on the public record, as of today, what Power and Water’s full-time employment numbers were as of 24 April 2014.
In the non-operational business units, there are 211 staff: 150 in generation; 325 in power networks; 166 in water services; 90 in remote operations; 78 in retail corporations; and system control has 33.8.
It is important we place the number of staff within Power and Water on the record today so we can best monitor how things go within the monopoly government owned corporation and the two new government owned corporations in the future.
Many staff were left surprised that the government was quick to roll over the existing Power and Water enterprise bargaining agreement for a shorter period of time and that EBA is set to expire next year. Upon expiry of that agreement, when staff are divided into the Power and Water Corporation, the Power Generation Corporation and the Power Retail Corporation, what will happen to wages and conditions?
For now, government is saying there is nothing to see here and all transferred staff will be heading to the new corporations on the same wicket. However, they will be subject to new management, a new board and new structures. What will happen to them after that? It is fair to ask the same question to staff within the Power and Water Corporation who will also be subject to changes and restructures.
Staff are worried, and it is little wonder their morale is at an all-time low when they have been subjected to cannings by this government time and time again.
They have had their professional reputations trashed by this government; their highly respected and experienced managers have been sacked or moved on to other places and they have seen their board sacked. They have seen highly respected, hand-picked members of the interim board walk away and resign.
The staff talk, and they were all fired up after the recent attacks by the Treasurer on them around the Utilities Commissioner’s report into the catastrophic blackout in March. He went to town on the staff of the Power and Water Corporation, and it was a disgrace. It is little wonder staff are not feeling too optimistic about their future, especially given the experience in other jurisdictions, where splits have taken place and led to fewer staff.
It has also taken a long time for the government to answer questions about the cost of structural separation. Until recently we were asked to believe the Treasurer’s $2m figure, which he plucked from thin air after being pushed by the media, but we have since heard this was not the full figure. It is clear in the NewCo project governance document of January 2014 that budgets did exist for the separation of Power and Water Corporation, and were in place and forecasted on a best case scenario.
There were also clear stipulations that if budgets are to be altered, the shareholding minister must sign off on them, and the budget presented by NewCo would be revised after the legislation goes through. I read that as a sign the current budget, presented to the Public Accounts Committee, will go up.
For two years alone, NewCo is forecasting the budget at $6.8m, and this contained a Power and Water component of $435 000. Power and Water, however, claimed at the Public Accounts Committee that the budget was actually $2.2m for structural separation this year alone, so the best case estimate at this point is $8.6m for the split.
Debate suspended.
STATEMENT BY SPEAKER
Death of Mr Raymond Chin OAM
Death of Mr Raymond Chin OAM
Madam SPEAKER: Honourable members, it is with deep regret that I advise of the death, on 12 December 2013, of Mr Raymond Chin OAM. Raymond was involved in the Northern Territory RSL, the Chung Wah Society, worked as Clerk of the Northern Territory Legislative Assembly and was a great and true Territorian.
I advise honourable members of the presence in the gallery of Mrs Jade Chin, his widow; Mr Michael and Mrs Jill Chin, brother and wife; Mr Brian Chin, son; Mr Russell and Mrs Diane Trimble, son-in-law and daughter; Ms Katrina Trimble, Ms Emily Jong, Ms Jessica Jong, granddaughters; and Mr Graham Chin.
Other family members have also taken the time to come here today: Mrs Darwina Fong; Ms Bonita Fong; Mr Danny and Mrs Sandra Markovic; Mr Gregory Chin; Mr Austin and Melanie Chin; Mr Oswald and Mrs Siew Chin; Mr John Chin; Mr Gordon Chin; Mr Brian McPherson; Mr Ian McPherson; Mr Daryl Thomas; Mrs Darleen Chin; Mrs Leila Chin; Mr and Mrs Desmond Fong; Ashley and Tania Chin; Mr Matthew and Ms Maddison Chin.
Honourable members, other guests have also come today to pay their respects: past Administrator, Hon Austin Asche and Dr Valerie Asche; Hon Daryl Manzie and Mrs Maureen Manzie; the Right Worshipful the Lord Mayor of Darwin Katrina Fong Lim and Michele Fong Lim; Mrs Barbara Geddys; the Very Revd Dr Keith Joseph; Bishop Clive Wood; and Rev Pat Williams.
If there are other people who I have not mentioned I welcome you one and all for this condolence motion.
CONDOLENCE MOTION
Mr Raymond Chin OAM
Mr Raymond Chin OAM
Mr GILES (Chief Minister): Madam Speaker, it is with deep regret that I note the passing of Mr Raymond Chin OAM, Chin Pak Jing, on 12 December 2013, and pay tribute to the outstanding Territorian he was. Pak Jing Chin, or Ray as he was better known, was born in a village in Taishan, Guangdong province, China on 11 June 1923. His father was born in Darwin in 1901 and worked in the family store, Fang Cheong Loong, founded by his grandfather, Chin Toy, who had arrived in Darwin in 1883. His business associate was Chan Fon, whose son, Harry Chan, went on to become the first mayor of Chinese descent of an Australian city. The thriving store was situated at the end of the Esplanade facing the wharf, near what is now known as Harry Chan Avenue. Ray’s mother, Sue Wah Chin, initially remained in China whilst her husband, Chin Ack Sam, worked in Darwin, but she came to Australia with Ray and his older brother, Eric in 1928.
Ray attended Darwin Public School, which had a total of 150 students at that time. He returned to China in 1932 and attended Pui Ching Academy, a boarding school in Canton. Following the start of Japanese hostilities in 1937 and the bombing of Canton, Ray managed to return to Darwin at the end of 1938, completed his education, and started work for his grandfather as a shop assistant for five shillings a week.
He witnessed the bombing of Darwin on 19 February 1942. He remembered:
- We were having breakfast at my father’s shop with the staff when I walked out of the shop and looked at the sun and saw planes coming out of the sun.
…The planes started dropping bombs over the wharf, so I realised they were not our aircraft.
As the staff scurried into the trenches, Ray initially sheltered under a banyan tree behind the Anglican church, now Christ Church Cathedral, and watched the bombs drop; the MV Neptuna was hit as she unloaded her cargo of depth charges and armaments alongside Stokes Hill Wharf.
Two weeks after the initial attacks, Ray and his 80-year-old grandfather evacuated south to Katherine, which was also attacked on the morning of 22 March 1942. They continued south to regroup with the rest of the family in Adelaide.
Life for the young man became a matter of working in an ammunition factory by day and helping in the newly established family restaurant in Rundle Street at night.
Repeated attempts to enlist in the Army were frustrated as he was judged to be too small, so Ray directed his focus towards the Royal Australian Air Force.
On 16 December 1942, he was accepted for training as an airframe technician or flight rigger. After training in Victoria, Ray went on to become a member of No 15 Squadron, a Beaufort bomber squadron supporting the fighting in New Guinea.
There was one occasion when Ray’s sergeant ordered him to relinquish his seat on a plane at the very last minute; he was very fortunate as that plane was shot down over enemy territory.
Ray met his first wife, Olive, who was then secretary to the Chinese Consul, on a visit to the Young Chinese League in Little Bourke Street, Melbourne, prior to the war. They married in September 1947. Ray returned to Darwin in 1953, followed a few months later by Olive and their small children, Janice, Brian and Diane.
Their first home was with his mother, Sue Wah Chin, in the stone house in Cavenagh Street. As soon as he was discharged, Ray joined the RSL, or the Returned and Services League. It was the beginning of a long and loyal association with the RSL, which included 10 years as RSL secretary, services president and, eventually, life membership.
Ray was convinced that when you meet a friend in the RSL, you have them forever. He was instrumental in ensuring the RSL had a CBD headquarters, even offering his own block of land in Litchfield Street as collateral.
The Queen’s Birthday honours, announced on 11 June 1996, included the award of the Medal of the Order of Australia for Mr Raymond Chin, in recognition of service to the community, particularly through the Chung Wah Society, and to veterans and their dependents through the Darwin RSL.
With the same passion for involvement, Ray Chin was the first secretary of Northern Territory Legacy. Legacy was formed in 1962 as part of the Legacy Club of Adelaide, and it received its independent charter 11 years later. In all, Ray held executive positions with Legacy for 21 years. His association with the Chung Wah Society also dates back to the 1950s, initially through Olive, who was active on the committee as social secretary. He became a life member in 1981, but his time as president coincided with Cyclone Tracy, which literally blew the Chinese temple away. Tracy also destroyed the family home he had built himself in Litchfield Street. An energetic campaign of fundraising and rebuilding led to the reopening of the temple in Woods Street in 1977.
From 1975 to 1980, Ray was honorary secretary of the Darwin Bowls Club. In 1985, a press release from the Rotary Club of Darwin North flagged the formation of the Probus Club of Darwin to hold regular meetings and fellowship for the retired and semi-retired. It was no surprise that, on 4 September 1985, officially declared foundation members included Ray Chin.
He spent 32 years in the public service, once he returned to Darwin from Melbourne and Adelaide in the post-war years. He entered the Commonwealth public service in 1951, studied at night school and worked in various Australian government departments until 1968 when he was transferred to the staff of what was then the Legislative Council of the Northern Territory. Ray progressed from being the Clerk of Records to Clerk of Committees. In 1974, the Legislative Council was replaced by the fully elected Legislative Assembly, with 19 members, and he held the position of Clerk Assistant.
As I mentioned earlier, Cyclone Tracy destroyed Ray’s home and the Chinese temple, but Bernie Kilgariff, then Speaker of the Legislative Assembly, remembered the first sittings following the cyclone when Ray was a mainstay in getting the Chamber up and running all over again. At the time, the roof continued to leak, but Ray paddled through pools of water on the Chamber floor, carrying a tape recorder to record all proceedings of the day so we could have formal records.
Ray was appointed Deputy Clerk in 1978 and then served as Clerk of the Legislative Assembly from 1982 until his retirement on 7 September 1983, the first Australian of Chinese descent to hold such an office.
However, as all who knew him can attest, Ray never truly retired. He continued, throughout his lifetime, to be a pillar of the local community. His mantra was simple: we like to help people. Ray Chin’s story is without doubt a wonderful example of the major contribution the Chinese community has made to the city of Darwin. Ray’s first wife Olive passed away in 1977, and he is survived by his second wife, Jade, and two remaining children, Brian and Diane. To them, I say thank you for allowing your husband’s life to be shared with the Northern Territory and the rest of Australia. We thank you, Ray, and pass on our best.
Ms LAWRIE (Opposition Leader): Madam Speaker, I thank the Chief Minister for bringing this condolence motion, quite appropriately, to our parliament. Ray Chin OAM was staunchly proud of the Legislative Assembly of the Northern Territory, having served so diligently in positions including, as we have heard, Deputy Clerk and Clerk.
I extend my personal condolences to his family, to Ray’s widow, Jade, and Di, Brian, Russell and the grandchildren. Ray was someone I knew pretty much all of my life, having grown up around the old Parliament House building on this site, and he was someone I cannot remember not seeing. He was a very gentle man and a gentleman in the truest sense of the word. He had a very strict understanding of the rules and procedures of parliament and the precinct, and held them in the highest esteem and regard.
I feel very privileged to have known him since I was a child, as I feel privileged to play hockey with Di. I will contribute some words straight from Di during this condolence motion.
I also want to extend sincere condolences from my mother, Dawn Lawrie, who is overseas at the moment. She worked very closely with Ray as a former member of the Assembly in the years Ray was here. He diligently and truly served the people of the Northern Territory, ably assisting all members of the Legislative Assembly with a great level of professionalism.
He was an extraordinary man and true Territory treasure. He was incredibly dignified, with a beautiful dignified nature. He had impeccable integrity, his incredible work ethic and that abiding dedication to family. We see the Chin and Fong families here today, a very tightknit community in the Northern Territory.
It is truly difficult to see how Ray crammed so much in to the impressive life we are talking about today. I believe he was our most prominent Chinese community leader. We have heard he was a president of the Chung Wah Society, a position he held for two terms over 14 years. He was RSL secretary, a foundation member and secretary of Probus, and held that very distinguished position of which he was very proud, Clerk of the Legislative Assembly.
A true gentleman, he was as much at home in the company of politicians, Administrators, Lord Mayors or visiting dignitaries. He spoke Mandarin and Cantonese and was equally at home with his fellow members of the Chung Wah Society at a series of working bees.
As we have heard from the Chief Minister, Ray’s home and the Chinese temple were both devastated in Cyclone Tracy. I vividly recall the struggle, post-Cyclone Tracy, to protect the temple and the Chung Wah Society grounds from the bulldozers, and the fight the community had to ensure the temple was rebuilt. I know mum spent much time working with the community to ensure it would be rebuilt. She spoke very fondly of the great work Ray did as President of the Chung Wah Society and the efforts the community made, under his steerage, to fundraise and rebuild the temple.
What many may not know is that – along with some other prominent members of the Chinese community – he personally guaranteed the bank loan to fund much of the rebuilding. He certainly was a man of conviction.
After surviving the bombing of Darwin during World War II, Ray joined the RAAF; he was told he was too short for the army. He served on two missions in New Guinea during the war, one of just three Chinese-Australians in a squadron of 400. Although he was an aircraft airframe mechanic, he spent 200 hours manning a gun on bombers.
He was not a man who sought honours, but they inevitably came his way. He was bestowed with a life membership of the Chung Wah Society in 1981, and awarded – I think it was a very proud moment for him – that distinguished Order of Australia medal in 1996. He was very traditional, making sure the younger generation of Chinese Territorians maintained their culture, traditions and religion. He was a true leader, and led by example in all roles he fulfilled. Ray Chin’s contribution to our city, and more broadly to our Territory and the Chinese community, is legendary.
Playing hockey with Di, I told her there is sometimes a chance for your own words and views to be provided directly to a condolence motion debate. These are the words of Ray’s daughter, Di Trimble:
- On a personal note, I vividly recall my dad as a very proud Territorian and true blue Aussie battler, who despite his family and extended family responsibilities, decided on self-education while working as a base grade clerk in the public service. He worked his way through to the executive ranks and was successfully promoted to the position of Clerk of the Legislative Assembly. Dad was fiercely loyal to all levels of power and authority; he respected and adhered to their protocols. He often quietly joked about telling the pollies that they were not permitted to break the rules, for example travel entitlements, so that he was a stickler for maintaining governance. Dad instilled strong values, ethics and standards into his family, especially respect, honesty, dignity, integrity, traditions and culture, never forgetting his humble beginnings and to give everyone a fair go. He established lifelong friends and enjoyed volunteering, generously devoting his time to many community organisations including the RSL, Legacy, the Chung Wah Society, Darwin Bowls Club, Probus and the Darwin Masonic Lodge. This community spirit also involved participation on two committees rebuilding Darwin post-Cyclone Tracy, namely Christ Church Cathedral and the rebuilding of the Chinese temple.
He enjoyed helping family, friends and other people who were less fortunate than himself, and was an encouraging and supportive father figure to the many Legacy families in his care. To keep active during his retirement days he enjoyed a beer and a good yarn with his mates at the RSL Club each week and Anzac Day, closely watched and listened to local, national and international politics, kept any interesting newspaper articles in diaries and had a meticulous record keeping system, for example, every TattsLotto ticket he had ever bought.
My dad was a wonderful inspiration and friend to the many people he met in the various walks of his life, and as gratitude of his lifetime achievements he simply said to us, ‘I have met many good people and had a good life’.
To the family of Ray Chin, thank you for sharing this magnificent Territorian with us. He will be very sorely missed. He was a beautiful inspiration to me growing up, and I feel very humbled and honoured to have participated in this condolence motion today.
Mr TOLLNER (Treasurer): Madam Speaker, I thank the Chief Minister for bringing on this condolence motion, and I thank the Opposition Leader for the beautiful words she spoke about Ray.
Ray was a good mate of mine, as he was to pretty much everyone he met. Listening to the Opposition Leader made me think of a book I read a few years ago about Queen Elizabeth. There was a quote in this book from a former Labour Prime Minister of England who, at the time, did not have a great like of the monarchy. When he first met the Queen, as prime minister, it was an interesting meeting, but the point he made was that he developed a deep respect and admiration for Queen Elizabeth. Whilst she was aloof from the political game, she understood and had an appreciation of the pressures which fall on prime ministers and people in power and authority.
This gentleman went on to explain how he could talk to Queen Elizabeth without any fear she would use the information in any political sense, but she always provided wise counsel. When the member for Karama mentioned that about Ray, I thought of that book because he was that sort of bloke.
He had a deep, abiding appreciation and respect for people in politics in particular – something that is rare these days – because he understood. It arose from his time as Clerk of the parliament. He understood the pressures people in public life often find themselves under, and he was a wonderful sounding board. I never knew his political persuasion, and I would be stunned if there were people here who could outline what it was, because he kept those cards very close to his chest. However, you could feel completely confident talking with him about the pressures of a job. He was President of the Darwin RSL from 2001 to 2005, which coincided with my time as the federal member in an electorate office across the road from the RSL. The RSL became my local and, consequently, I had a lot to do with Ray during lunch hours or after knocking off from work.
I first met Ray soon after arriving in Darwin. I joined the Freemasons in the early 1990s, and it was impossible to be a member of the Freemasons and not know of the legendary Ray Chin. We had quite a good relationship there. Freemasonry in Darwin will not be the same without him, and the Cattleman’s Bar at the Royal Darwin Show will suffer. It is always difficult finding volunteers to work behind the bar when the Royal Darwin Show is on, certainly from the Freemasons. Ray was a stalwart; you would be hard pressed to turn up to the Cattleman’s Bar and not see him there doing his bit for the brotherhood and waving the flag. He was a very proud Freemason.
The point made about how one person can seemingly cram so much into a life is a good one. Ray Chin did an enormous amount for the Territory, his family and community. He will be sorely missed. It is hard to imagine Darwin without Ray Chin; he was emblematic of life in the Top End and Darwin. He represented that easy going character. Popular in a multicultural society, Ray represented everything we aspire to be in the Top End. He will certainly be missed.
I thank the Chief Minister for bringing this on. I relish the opportunity to put on the record my thanks to Ray Chin for the time he spent with me in particular, but also the work he did for the Territory over so many long years. My fondest regards and deepest sympathies go to all Ray’s family and many friends who have come here today.
Mr GUNNER (Fannie Bay): Madam Speaker, Ray Chin OAM was a model Territorian and a true Territory gentleman. As Clerk of the Legislative Assembly, he served with great distinction. Without a doubt all members of this parliament can say Clerks are priceless, and Ray was priceless for more than just being a Clerk. He lived Territory values of hard work, community service, love and devotion to his family and a quiet can-do attitude. Ray just did, and never sought recognition. You only realise how much they took upon themselves and the size of the hole they leave behind when they leave us.
From talking with Ray’s brother, Michael, I know Ray had a leadership role within the family – a very large family. He was the second eldest of seven boys and four girls. Like others in this Chamber who have grown up in large families – not that large, but large – we know those within our families who take on responsibility to ensure things happen, wounds are healed and relationships are kept, no matter how far the family spreads. His filial piety, quiet dedication and leadership through deeds extended to his commitment to public service and the valuable contribution he made to the common good.
Ray’s humility, impeccable integrity and dedication to serving the community is well known, and speaking to this condolence motion today, we all pay tribute to the significant achievements he made during his life. His love of Darwin started in 1928, where he arrived with his family, aged five. Ray’s father, Sam Chin, was not born in Darwin, but he was born in China, where his father met and married Ray’s mother, Sue Wah Chin. Over the course of his life he came and went, but always returned to Darwin because this was home. He was born in China, in a village near the city of Taishan in Guangdong province. The Taishan region was the source of many 19th century Chinese migrants to Darwin, as well as other parts of Australia, the United States and Europe.
He was very proud of his heritage and education in China at the Pui Ching Academy in Guangzhou, where his family lived from 1934 to 1938. It was there he learnt fluent Cantonese to compliment his native dialect from the Taishan region. After the Japanese invasion of China in 1937, Ray and his family returned to Darwin in 1938. After witnessing the bombing of Darwin in 1942, he was forced to evacuate to Katherine, and then Adelaide, with his family.
Famously, Ray was apparently so upset at the bombing of Darwin during World War II – shielding his relatives in a ditch during Japanese bombing raids – that he enlisted. The Army thought he was too small, so he went across the road to the Air Force, which was smart enough to sign him on, and the RSL legend was born. He served in New Guinea, as a rigger and machine gunner. He was Secretary of the RSL for many years in the 1960s and 1970s, and president from 2001 to 2005. He was also Secretary and President of Legacy for many years from the 1960s.
A little-known secret of the bombing of Darwin is that it was a cultural and culinary victory for Adelaide, with the families of Ray’s parents and uncles starting what some say was the first Chinese restaurant in Adelaide, in Rundle Street. After a year, Ray’s family branched out and started a Chinese restaurant of their own close to the East End Markets, near the corner of Rundle Street and East Terrace.
Mother Nature should be glad there was nowhere for Ray to sign up to after Cyclone Tracy blew through the family home at 4 Litchfield Street, sheets of corrugated iron from Tall Tale Tex Tyrell’s shed whistling through the air on that frightful night.
His public service included working in this parliament for many years as the Clerk; that is how I first met Ray, through my mum, who works in the Legislative Assembly. I came to know Ray better as his local member. I saw him at the bowls club, where he also served for a while – I think Ray helped everybody at some stage – or at home with Jade, where he would turn the volume down on the Chinese language TV show, and we would talk about the Chamber, Lumpy, Gaddy, Darwin and life; he was always good to talk to.
Ray is well known for his tireless work for the Darwin Chinese community. It was for that work he received the Order of Australia medal as a two-term President of the Chung Wah Society from 1973 to 1978 and 1985 to 1995, but also as someone who was prepared to roll up his sleeves and get the job done, from the Dragon Ball to the satay stall, the New Year’s blessings to one of the never ending working bees, particularly the annual cleaning of the temple. Even in his 80s, he would be on his feet for four hours, cutting meat at the Chung Wah satay stand at the Royal Darwin Show.
Ray was known to members of the Chung Wah Society and the Chinese community generally as ‘Uncle Ray’, a sign of respect and affection for him as an elder of the community. Whilst the respect and esteem in which Ray was held across our community is well known, his commitment to the Chung Wah Society is best exemplified by the fact he was prepared to put himself on the line – along with several other prominent members of the society – as a guarantor for the bank loan required to fund much of the rebuilding of the temple after Cyclone Tracy.
In remembering Ray I want to pay tribute to the life of his daughter, Janice, who sadly passed away only two years ago. Jan was the Chung Wah Society’s general secretary. She too made a huge and lasting contribution to the society and is dearly missed.
I thank Michael for his generosity in sharing stories of his brother, Ray, and I thank Austin Chin and the Chung Wah Society for its help in drafting my words today. Ray’s values and deeds were a tribute to his Confucian and Christian beliefs, and his quiet respect for elders and family who had passed was seen through his dedicated observance of the Qingming Festival, a special day to honour relatives who have passed on by visiting their graves. Ray would always organise for extended family to go to grandfather Chin Toy’s grave in the Gardens Cemetery, and on to the general cemetery at McMillans Road.
The tradition has now passed on to his son, Brian, his daughter, Diane, and their families. Ray will always be remembered. I will finish with the moving words of his family – many of who are here today – which appeared in the NT News last December:
- Raymond Chin OAM …
Dearly loved Father of Diane and Father-in-law of Russell, Adored Grandfather (Goong Goong), of Nicole & Katrina.
A very special Dad and Mate
Family, friends and traditions meant the world to you
Generous, loving, kind and caring of you
Respect, dignity and integrity were your values
Loyalty, dedication and passion your virtues
From humble beginnings to many commitments
Quietly proud of your community achievements
Honest, unselfish and hard-working your philosophy
Quite an inspiration to your family
Always enjoyed a beer and yarn with your mates
You had a good life packed in one
The difficulties seen as none
You saw the good in everyone
Dad, you are our Number One
Now having a peaceful rest
After giving your almighty best
Dad, we shall remember you as a very proud Territorian and a true blue Aussie. You will be forever in our hearts & thoughts.
I extend my sincere condolences to Ray’s family and friends. May he rest in peace.
Mr STYLES (Transport): Madam Speaker, I sincerely endorse all contributions to this condolence motion. I would like to offer a quote that is well known in the Australian community:
- We all stand on the shoulders of those who came before us.
We are the beneficiaries of so many things Ray Chin did for his community. People stay in the Darwin community and raise families because it is a great community. It is a great community because people like Ray Chin showed a great deal of leadership, all the way through his life from when he was a boy. We have listened to some of the fantastic things he achieved in his life.
I came to the Territory 33 years ago and I first heard of Ray Chin then. As a young police officer dealing with legislation you hear particular names, and Ray Chin’s was one of them. I was fortunate enough to have quite a number of conversations with Ray over the years, especially on Anzac Day and at various functions. He was always invited as an honoured guest to so many functions, especially around this House.
As a role model you cannot fault Ray Chin. He was a quiet man. After his sad passing I spoke to a number of people in the Chung Wah Society and they gave me some of the history. I will not repeat it – a lot has already been told – but it is through people like Ray Chin that this city has become the great place it is. The legacy of people like Ray Chin will be passed on to our children and grandchildren.
They will be able to enjoy the benefits of a fantastic multicultural city because of what Ray contributed through his efforts in the Chung Wah Society, the RSL, through the public service and by being the person he was. People often ask me, ‘Why do you live in Darwin?’ You only have to look at what we have in the Northern Territory, particularly Darwin. It is a unique city because of the contribution of Ray and the Chinese community he led. It is through those contributions this will continue. As a role model he showed all of us a particular way to live, to look after your community and the way to commit some time to your community to make it a better place.
I believe that Ray – in all of the conversations we had – had, at the forefront of his mind, that he was a role model, not only for his kids, but his grandkids and community. If we all live to the same values Ray chose to live by, we will have a very strong community and continue to have a fantastic Darwin and Northern Territory. My condolences go to you. Lest we forget Ray Chin.
Madam SPEAKER: I also extend my condolences and sympathies to the family and friends of the late Mr Ray Chin on his very sad departing. I extend sincere sympathies to you for what is clearly a great loss to not only close family, but all of his family and friends.
I pass on expressions of sympathy from the recently retired Clerk, Mr Ian McNeill, and his wife Kit. He has asked me to let honourable members know, as well as all visitors here today, that Ray was tremendous in his role as Clerk and Clerk Assistant of the Legislative Assembly, and a credit not only to the role, but also to the whole parliament. He took it very seriously, and Mr McNeill asked that I pass on his and Kit’s sympathies to you as well.
I have also been asked by my mother, Noel Padgham, to pass on her sympathies to you all on the departing of Ray. She too knew him from her time in parliament and she extends her sincere sympathies to you all.
Motion agreed to.
Madam SPEAKER: If we could now stand, honourable members and guests, for one minute’s silence.
I thank honourable members for their contributions to the motion. I invite the friends and family of the late Mr Ray Chin, as well as any members, to afternoon tea in the main hall. Thank you.
RESPONSE TO PETITION
Petition No 34
Petition No 34
The CLERK: Madam Speaker, pursuant to Standing Order 100A, I inform honourable members that a response to Petition No 34 has been received and circulated to honourable members. Pursuant to established practice the text of the response will be included in the Hansard record and placed on the Legislative Assembly website.
A copy of the response has been provided to the member who tabled the petition for distribution to petitioners.
- Petition No 34
Regional Authority for Nauiya Community, Daly River
Date Presented: 20 February 2014
Presented by: Mr Higgins
Referred to: Minister for Local Government and Regions
Date response due: 15 May 2014
Date response received: 2 April 2014
Date response presented: 6 May 2014
Response:
- On 16 September 2013, I received correspondence from Mr Andrew McTaggart enclosing this petition signed by 102 residents of the Nauiyu community who supported a move to a new regional council being established in the Peppimenarti, Palumpa and Wadeye region.
On 4 November 2013, following a meeting held at Peppimenarti between the Chief Minister, the Hon Adam Giles MLA, the member for Daly, Mr Gary Higgins MLA, myself and clan group representatives, I issued a press release advising of the region’s desire for a new council.
On 3 December 2013, the member for Daly received advice of a decision by the trustees of the Nauiyu Nambiyu Land Trust that the Nauiyu community support staying with the continuing regional council in the Victoria Daly region.
By the end of March 2015, all councils must have undertaken a constitutional review as required by Section 23(1)(c) of the Local Government Act. This review considers the adequacy of the existing representation of the area.
Given the differing views, I will advise the new West Daly Regional Council to include in their constitutional review the option of including Nauiyu within their boundaries.
POWER AND WATER CORPORATION LEGISLATION AMENDMENT BILL
(Serial 63)
(Serial 63)
Continued from earlier this day.
Ms MANISON (Wanguri): Madam Speaker, We know there are significant costs with regard to structural separation. I expect this figure will rise, and it will be interesting to hear these revised numbers and where they have landed over the next few years, particularly through the estimates process.
We know these bills have the following cost implications: legal costs to establish the three new corporations; the cost of developing contractual arrangements between the new corporations; operational costs for the additional boards; ongoing additional executive and management expenditure, including salaries for the new CEOs and chief financial officers; the cost of consultants and advisors, and we heard through the Public Accounts Committee that advice was received from a range of legal advisors about that; and the ongoing annual cost of establishing, for example, separate support functions and systems rebranding. Given this separation will cost in the millions and there is no evidence of what benefits it could deliver, that is a concern. These costs will increase if there are unforeseen issues post-separation, especially around shared services provisions.
We have also heard little from the government about its desire to join the Australian Energy Regulator and what that will mean for the Territory and these three new government owned corporations. We have not heard whether this will mean an additional regulatory burden for the NT and what the joining requirements will be.
There are many questions the government has left unanswered about its move to break up the Power and Water Corporation, and I suspect we will not receive all the answers we need today. This bill, along with the two others, is being rammed through because the government has managed to maintain its numbers.
This model has been followed before in other jurisdictions. The government has shown no evidence or analysis on how it will benefit Territorians. It will lead down a path towards the sale and privatisation of valuable assets currently in the hands of Territorians. Once they are sold we will never get them back.
The shareholding minister is looking to obtain new powers to transfer assets and government owned corporations currently within the hands of the Territory. It will lead to higher power, water and sewerage bills, and it will mean less reliability of services, more outages and interruptions.
The Treasurer believes it will mean fewer staff for Power and Water, which he thinks has too many. Territorians will be hurt under these changes. They will further increase the cost of living, and they have had no say on the split or the future of Power and Water.
I urge members to think very carefully about what these changes to Power and Water will mean to the people they represent, whether they can continue paying more for power, water and sewerage services, and whether they want to see more black-outs in their homes and businesses. That is where we are heading. Many questions still need to be answered, and the government’s determination to ram this legislation through with no consultation with Territorians is a disgrace. They have been given no say on the future of their utility and this service, which is essential to us all.
I urge members to think very carefully about how they will vote on these bills, what it will mean to the Territory and to stop this rushed process. This process has been rushed; there has been no consultation. There is no evidence to show there will be benefits for Territorians, and in other jurisdictions it has led to higher prices and less reliability for all.
I urge members not to support this bill and the two bills which accompany it. The opposition remains opposed to this suite of bills. The opposition will not support these bills which will allow the shareholding minister to eventually sell assets owned by Territorians.
We will not support these moves by government which will hurt Territorians and see the cost of living further skyrocket for all.
Thank you.
Mr ELFERINK (Attorney-General and Justice): Madam Speaker, I start by pointing out a flaw in the argument of the member for Wanguri, who spoke stridently against this legislation. Despite the fact it has gone through the normal processes of parliament, she now claims it is being rushed, but there is an inherent flaw in her argument. She asserts two things: prices will automatically go up as a result of the separation of the Power and Water Corporation into its strict components, and we have not answered any questions and nobody knows anything about it.
If you compare those two assertions they cannot be reconciled, because if you use the logic of her first assertion, that all prices will go up as a result of this separation, and then apply her second assertion, that nobody has told us anything about it, she has defeated her own argument. By saying nobody has told people anything about it, therefore she knows all of these things will happen. This shows her argument is less founded on information, which I understand she and members of the opposition have been provided, and more on the presumption that structural separation will automatically lead to privatisation, which is all bad and wrong.
This government could not have been clearer at any stage; this will not go down the path of privatisation, but it is going down the path of creating more competition. Shock horror we should have more competition in the Northern Territory for supplying electricity! There are three components to structural separation: generation, network and retail. This may come as a huge surprise to members opposite, but even under its regime, the retail market became contestable.
If anyone would like to see the success of the retail market in its contestability, just bask in the warm glow of these fluorescent Chamber lights to realise the person or organisation retailing to the Legislative Assembly is not the Power and Water Corporation. It is QEnergy, a different retailer working in the niche market of tranche one customers, of which the Legislative Assembly is one. The sky is not falling in, and it is not falling in over there either. It appears the former government was prepared to accept the concept of retail contestability, because it allowed it to happen. Retail contestability was already there at the change of government, and continues to be there.
The Treasurer has identified other inefficiencies in the system and wants to address them. Benchmarks for future power increases in the Northern Territory have already been set. The Chief Minister reiterated again this morning that those benchmarks continue to exist, and that is the cost of power going forward. The cost per kilowatt hour of electricity in the Northern Territory is at about the national average …
Mr Tollner: It is a bit below
Mr ELFERINK: Okay, it is a bit below. We provide electricity in the Northern Territory to all customers, including those in the bush, at the same rate, which is almost the Australian average. All customers in the bush are currently enjoying power prices set by the government, and will continue to do so. Whilst it costs a bucket load more to provide electricity in the bush, customers there will pay no more than a customer in Malak, Palmerston or Nightcliff, because of the community service obligation, or CSO as it is known, which has been around since self-government as far as I am aware. The government …
Mr Tollner: It is the universal or uniform tariff.
Mr ELFERINK: Okay, it is the universal tariff; I thank the Treasurer for that. You have this benchmark, but it is the only one by which you can buy electricity in the Northern Territory. You cannot buy electricity at any other price than the benchmark set by government. That benchmark will not change, because we have already articulated what those costs will be into the future. We know what the cost will be, but what if there is a provider wanting to come into the marketplace because it reckons it can generate electricity for less than the Power and Water Corporation? Moreover, it can do it for less than the standard market rate.
To give comfort to any such organisation or player coming into the field, one of the things they will want to ensure is they are not competing with a provider which owns not only the competing generation, but also has possession, through a monopoly arrangement, of the network. Let me give you a parallel. The parallel I draw is with a railway. We have a railway in the Northern Territory, and the network is the steel ribbons which do not move anywhere, and exist between Darwin and Alice Springs. That is owned by a company. You then have a business wanting to take its rolling stock across that railway. If it is the same company which owns the rolling stock as owns the railway, any competitor would immediately be concerned that the moment it tried to get on to that railway with its own rolling stock, the owner of the competing railway would be able to transfer the cost of running the rolling stock to the cost of running the network or vice versa.
People would be very nervous operating in that environment because the cost of running the rolling stock could be manipulated by the owner of the railway. If, however, they were two separate businesses, one running the network and the other generation, you would be competing against another competitor on a level playing field which had its own rolling stock. You would then be buying space on the network, namely the railway, to use it from a different business, and there would be no crossover between your direct competitor and the competitor which owns the railway.
This parallel works with the generation of electricity. If the generator owns the network you cannot be entirely certain you are competing on an equal footing with another generator.
I understand Treasury has had difficulty determining which money goes where in relation to the Power and Water Corporation, and the arrangements between generation and network are not clearly defined. If, however, you structurally separate the two, you achieve one business running generation and another running the network. That will create an environment where, because tariffs are already known in advance, a competitor might feel comfortable coming into the Territory marketplace to say, ‘We can do it more cheaply’.
If that is true, and we believe that is the case, a competitor will come into the marketplace. Imagine a circumstance not entirely different to one I experienced in South Australia a couple of years ago when I was staying at my mother-in-law’s place for a night or two. There was a knock on the door, and the person at the door was representing an electrical generation company, selling its product; their big sales pitch was that the company could do it more cheaply than its competitors.
If we agree with members opposite and we resist this structural separation, we are depriving electricity consumers of the opportunity to possibly enjoy cheaper power. It is unlikely this cheaper offer would find its way into the bush. I would be surprised if there was a competitor, but who knows? There might be one, with new technologies, which could compete with the Power and Water Corporation and the CSO in the bush. The benchmark price in the bush will still be benchmarked against the rate set by the Northern Territory government. Having made that observation, there may well be, certainly in the larger centres, a capacity for other generators to come into the marketplace.
If we had multiple generators we could also have a fall-back position against failures in one particular system, because you would have a number of generation systems available to the marketplace. I also note that in 2011, an Ernst and Young study found that Victoria’s networks cost had decreased by 9% on a customer basis between 1996 and 2010. The Victorian network, as I understand it, runs separately from generation, and because of this costs had decreased. It had become 9% cheaper for the network to operate on a customer for customer basis. That would be an extremely attractive outcome for the average person paying electricity bills, particularly in an environment where many people choose to run their air conditioners as much as they do in the Northern Territory. This is about the potential for cheaper electricity.
The last time I stood in this place I said electricity prices will probably continue to go up, but structural separation would put downward pressure on prices. I must correct myself now, because not only does it put downward pressure on prices, it has the effect of making network supply cheaper. It costs less.
That is from Ernst and Young’s 2011 report on Victorian domestic electricity prices and its studies in those areas. It is an important component of this, and I am comfortable with suggestions by the Treasurer that this is a good idea.
Yes, I have a great belief in market competitiveness; that is part of my political philosophy, and I have a great belief that competitiveness will produce better prices from the retail sector and from the network and generation environments.
It would be far better to allow competition in this space, rather than continuing to underwrite a monopoly provider which has historically shown levels of inefficiency many people would find unacceptable.
Since economic reforms, Victoria’s electricity consumers have enjoyed the lowest prices of any state within the national electricity market, or NEM, and it is widely observed as being the most competitive market of its type in the world, with one in four households switching providers every year. That is because people are going into the marketplace and choosing who they buy their electricity from.
Mr Wood: Victoria has the fifth-highest electricity prices by country.
Mr ELFERINK: It is cheaper than us right now. I pick up on that interjection because it is a very valuable one; I thank the member for Nelson for it. Victoria does not charge as much as we do. What does that tell you about the problems we have in the Northern Territory, and the prices we are paying, which are only the national average? We have some of the most expensive electricity in the world; that is the assertion from the member for Nelson. I love it when he tries to interject to describe a point, but in the process exposes the depth of the problem we have.
I reckon the member for Nelson would be champing at the bit to support legislation allowing competition to enter the marketplace so we could have cheaper electricity.
Mr Wood: It already exists.
Mr ELFERINK: He will argue against – I suspect by the quality of these interjections – a competitive environment because he wants to keep a dead hand on the tiller of competition. He has bought into this fear that competition is somehow bad.
Mr Wood: I did not say that; you already have competition.
Madam SPEAKER: Order!
Mr Wood: Who owns this place? Who runs this?
Mr ELFERINK: You have made my point from earlier. Were you here before when I was talking? I talked about QEnergy.
Mr Wood: The Treasurer has not spoken about cheaper prices, you are the only one.
Madam SPEAKER: Order, member for Nelson!
Mr ELFERINK: I am talking about what has happened in Victoria, and there is a competitive environment there
Mr Wood: It is competitive, yes, but that does not mean it is cheaper.
Mr ELFERINK: This is the point. Ernst and Young has said it is cheaper.
Mr Wood: What is it cheaper than?
Mr ELFERINK: What it would otherwise cost to keep – speak your mind, you will get your chance. I am happy to entertain you, but for a bloke who constantly whinges about being interjected upon, you are having a bloody good day today, mate.
Mr Wood: I have only had five minutes.
Madam SPEAKER: Member for Port Darwin, withdraw that comment.
Mr ELFERINK: I withdraw, Madam Speaker. I am curious as to how the member for Nelson will argue this, because I am demonstrating, quite clearly, some of the reasons electricity might cost less. I suspect from the interjections that the member for Nelson will make one of his each way bet speeches shortly.
We will find ourselves in a competitive environment, and Labor stridently resists competition. That is its political pedigree. Members opposite would rather maintain an environment of expensive power prices so they can keep their hand on the tiller, expecting taxpayers to fund an organisation which has produced electricity in such a fashion as to require ongoing support from Territorians. If another punter in the marketplace says they can do it more cheaply and sell electricity into the marketplace, I would welcome that. It is worth pursuing an opportunity to do so through structural separation.
As I said, this is benchmarked at a certain level. We know what the price of electricity in the future will be in the Northern Territory because it has already been articulated. It will not be any more expensive than what has been said by government. If we create an environment where somebody can come into the environment and do it more cheaply, they will sell electricity into the marketplace more cheaply. That is not rocket science and is exactly what this government is arguing for. It is almost like members opposite do not want try it or look at it in case they are proven wrong.
As far as I am concerned, this is a positive step forward for the Northern Territory. A competitive marketplace will serve the interests of the people of the Northern Territory and produce cheaper electricity than it otherwise would have. If competitors cannot come into the marketplace and fill that gap, consumers will stick with the product they know from the Power and Water Corporation, and it will be at the price set by government.
I am not sure how people think they will lose, and still cannot imagine, in the face of that set price regime, how the member for Wanguri can maintain the position that electricity will somehow become more expensive.
I look forward to the debate continuing. We will have a similar debate several times today because we are dealing with each of these bills separately. You must be careful of scurrilous misrepresentations from members opposite, and you can already hear it from the member of Wanguri, who says this is being rushed through. It is not; it has gone through normal parliamentary processes, and whilst I understand some members of the PAC feel we should hold it over until it reports, this is one of the reasons I cautioned farming that to parliamentary committees. I would have to double check, but I am pretty sure I said in this House that if a committee chooses to do so, that is fine, but it does not mean the legislative program of government will slow down to accommodate committees. If committees are anxious to make reports, they should do so in a timely fashion.
I also note a number of other organisations, including the Energy Users Association of Australia, the Energy Networks Association and the Energy Supply Association of Australia all support what the Northern Territory government is doing on the grounds a more competitive and efficient energy sector is positive and good for the marketplace.
I will quote from an Energy Supply Association of Australia press release from 2 May 2014. It says:
- The Northern Territory government’s vision for a more competitive and efficient energy sector got a tick of approval at the COAG Energy Council meeting in Brisbane yesterday. The nation’s energy ministers expressed their support for the government’s reform agenda, noting that the Territory was the last remaining jurisdiction with one power company covering all parts of the supply chain. Energy Supply Association of Australia Chief Executive, Matthew Warren, said market reform – starting with the restructure of Power and Water Corporation into separate businesses – was fundamental to minimising costs and encouraging some much needed competition in the Northern Territory.
‘Dismantling Power and Water Corporation’s monopoly is the first step towards developing a more open and efficient market that’s attractive to new businesses and encouraging competition in the NT’ he said.
I can go on quoting from this press release. Suffice to say the Energy Supply Association of Australia:
- … seeks to positively influence government policy decisions to ensure that Australia enjoys the benefits of a safe, secure, reliable, sustainable and competitively priced electricity and natural gas supply.
This is the sort of endorsement you hope for in these circumstances. The Energy Users Association of Australia makes similar observations and continues to support the Northern Territory government’s steps in this direction. The Energy Networks Association also throws its weight behind what the Northern Territory government is trying to do.
These organisations believe in the competitive environment because it produces better results. I take their, as well as Ernst and Young’s, word for it, and I believe a competitive environment is good for the consumer. I have seen no evidence that a competitive environment creates events such as power supply interruption any more than the government’s supplier. The Territory government, as a supplier, probably has one of the poorer records for (inaudible) events across the country. I support any environment which limits those events.
There is little downside and much to be gained for Northern Territory consumers. Whilst the Labor Party continues to create fear around this, I suspect you will find, especially for those who live in our larger consumptive bases, there will be a positive result in the cost of electricity in the Northern Territory.
Mr WOOD (Nelson): Madam Speaker, I thank the member for Port Darwin for his views on this matter. I had to laugh when he said he is worried that when members of the PAC raise a concern there is not enough time to debate this. If there was an honest approach to what we are doing today, the government would not have stalled this legislation before the Blain by-election; it would have been passed, but it was stalled for political reasons. It is disappointing the minister said that, because this government had the power to allow the PAC to look at this legislation long ago, but refused.
I tried to pass a private member’s motion asking the government to look at this. I looked at what the Tasmanian government did; its parliamentary accounts committee looked at the disaggregation of the Hydro-Electric Corporation and other related matters in 1998. That is a fair time ago, but the Tasmanian government realised it was a very important matter, put the resources into investigating it and a 116-page report was produced. The committee had about 20 meetings, operated for about five months and brought back a proper series of recommendations and findings. Many of the findings touch on the same issues we are dealing with today about the importance of disaggregation and whether it will improve things or not.
Tasmania had a government which realised it was a major change in policy and put the effort and time into involving the community and the parliament with it. That did not occur here. I thank the member for Port Darwin for supporting a motion allowing the PAC to self-refer this matter, which it did. It had one meeting with about eight people and was supposed to come up with some recommendations within a short time. That is not the way to look at something so important.
The member for Port Darwin said the member for Nelson will have two bob each way. There are sometimes third opinions in this House, and that does not mean you are having two bob each way; it means you might have some genuine concerns about what is proposed by the government. For instance, in all the debate on this matter not one member of the government has said there will be cheaper electricity prices. That has never, as far as I know, been part of this debate. If the member for Port Darwin could show me where anyone supporting this, even the Treasurer, has stated there will be cheaper prices – I do not know where we will find that statement. I will go through some of the statements which have been made, because that needs to happen to highlight some of the issues which concern me.
I am not against competition, but we already have it. It is not a new thing. Tasmania not only wanted to look at disaggregation, but also at allowing competition into the market. We already have competition, otherwise QEnergy would not be supplying power to Parliament House. What is wrong with the competition we have now? What is stalling other people? Is it the disaggregation of Power and Water or simply that the market is too small?
QEnergy and others are concerned Power and Water, in its present state, is not transparent and there are possibilities of cross-subsidisation. There is no proof, by the way, and that has been mentioned by a couple of people who have commented on this matter. They have said the present situation does not encourage competition, it does not make Power and Water work harder and that is one of the reasons for introducing these changes.
These are reasons for these changes given by the minister during his second reading speech; he said this will:
- … improve the competitive environment to make it more attractive for the private sector to enter the electricity market …
- … provide competitive electricity services to Territorians and Territory business.
Will it supply competitive electricity services to average Territorians? We have already heard QEnergy is not interested in households. I have not heard of one company interested in being part of competition for Territory households. They are only interested in the big stuff because that is where they see their margin.
QEnergy is like a trading company which deals with finding the best price for, especially, small business and businesses in relation to the retail market. As was said during the Public Accounts Committee forum, they are not in the market for domestic suppliers.
It is claimed the present structure is not conducive to the efficient supply of electricity to the market. That has been said many times, but I would like the Treasurer to tell us where the inefficiencies are. If you say somebody is more efficient, you are making a presumption Power and Water is run inefficiently. If someone is telling me Power and Water is not running efficiently, would they kindly tell me where it is not efficient?
I have heard that word used many times by many people and not one has told me where it is inefficient. I presume, even though the member for Port Darwin was talking about networking – perhaps I have missed something in this debate, but I thought we were talking about generation. Networking was, to use a farming term, ring locked, and retail was the third division. They were to be broken up into separate companies. I presume we are saying one will stay as a monopoly and the other two will have competition.
There was a lot of discussion about networking, and I do not know if it is relevant to this debate. I am not saying it is not an important thing to talk about, but I am not sure that was part of the debate we were recently having.
One of the classics is - the Treasurer said it today using different words – this will bring Power and Water in line with electricity companies, public and private, in the rest of Australia. What about Western Australia? It had eight years of disaggregation and has decided to turn it around. We are also not connected to the grid, so are we trying to say that because some other place has it, it is suitable for the Northern Territory? A classic example is this government deciding it will have open speed limits, not allowed anywhere else in Australia; it says, ‘We have wide open roads which are suitable’. I could use the reverse argument and say, ‘Why do we say that because it was good in other parts of Australia it will be good here?’ It might be, but could someone explain to me why it would be? Could they give me some facts and figures and not make a grand statement? Anyone can say it has happened in the rest of Australia over the last 15-20 years, therefore it will be okay for us. I would like a bit more concrete information before I agree with you.
In his second reading speech, the minister said it:
- … will greatly assist the corporations in becoming financially sustainable and efficient organisations …
I again ask the Treasurer to show us the inefficiencies. If you keep saying Power and Water is inefficient, or could be made more efficient, you are telling me it is an inefficient organisation. It has to be inefficient in a couple of ways, such as how it produces electricity. Where are the inefficiencies in generation and retail at present? It would be nice not only to say it will improve efficiency, but to tell us where existing inefficiencies are which could be improved.
The minister also said it is a:
- … significant step on the path to a more efficient, more competitive electricity market …
Who is it competitive for? Perhaps it would be for big business, but not for householders.
NewCo said - this is where it differs from the member for Port Darwin - this will help the government to:
- put a lid on power prices and
to place downward pressure on power costs.
Can you show us how that will happen? Show us where these savings will be which will put a lid on power prices. It has not happened. NewCo also said this will:
- … provide the instruments for identifying and rooting out inefficiencies …
- by putting more focused boards and management teams into place
It also mentions finances being ‘truly transparent’. Ken Clarke said, during the Public Accounts Committee hearing, they have nearly broken up the divisions, so you can see what they are from a financial point of view.
Benchmarking: A question was asked during the Public Accounts Committee hearing about being shown an equivalent system to Darwin’s, and there is not one. They were looking at Kalgoorlie, which is connected to the grid. It is difficult to benchmark when there is no one else in Australia to benchmark with. NewCo also says we will turn on the blowtorch on costs, which can only be done through competition. That is fine; I am not opposed to competition, but can someone tell me where the blowtorch will go and where costs can be cut? It is a statement. We have been around a long time, so someone must know how much it costs to run generation and where you would find competition. Treasury has said this will provide safe and reliable least cost electricity to Territorians. There is also a statement which says:
- … the historical financial performance of Power and Water suggests these economies have been more than offset by the additional complexity that comes from integration.
Ken Clarke said they are working to achieve financial transparency and have just about achieved it. The Treasury also said the boards of the GOC will exert:
- … an increased degree of specialisation in their particular areas.
What concerns me is supporters of this process are saying you will break it into three different companies. This will make it work better, they can concentrate, there will be three boards, three administrations and a fair bit of money will be spent, at least $6m or $7m. Can someone tell me if the Origin electricity company has broken itself into three different companies? It produces, undertakes exploration and sells power. I looked at Origin’s website, as far I could dig, and I found nothing to say it has been broken up.
We are saying to Power and Water, ‘You have to break yourself into three different companies and have three different boards’. Origin has one board to run quite a large company. It has 4.5 million customer accounts. That is a large number of people, but it has one board. Why should you have three boards if you are trying to run an electricity company?
The disadvantage of three boards is they do not start talking to one another, whereas with one board, the company knows how it is operating overall. All parts, such as retail and generation, talk to each other. They are not separate. One board is capable of running a company with 4.5 million customers. Why must we break ours into three? Are we not putting Power and Water at a disadvantage against other companies that come in, which have not had this similar break up?
QEnergy is holding discussions with Northern Power. I imagine they talk to each other but are separate companies in the first place. If Origin Energy comes here, will we ask it to cut into three individual companies? I do not think so. Some of this advice, thankfully, came from the Auditor-General, and it gave me some indication – I will read some of it because my argument is we do not need to break it into separate companies and can leave it as separate divisions, as Ken Clarke said they have nearly done already.
The argument against that is, as Ken Clarke said, back in the days of Paul Everingham or Shane Stone, the pendulum will switch back and we will lose control. Do not forget we still have competition. We are saying that to improve competition we need transparency in how Power and Water operates. This is what Frank McGuiness, the Auditor-General, wrote back to me:
- Until 2007-08, Power and Water Corporation, along with all other entities, was required to include segmented information in the notes to its financial statements. A copy of the relevant note is attached. A change in accounting standards which flowed from a decision that Australia would adopt international accounting standards saw the requirement to include segmented information dropped for entities that did not issue financial statements that were traded in financial markets. Accordingly, Power and Water Corporation ceased publishing the information, and as auditor I was not in a position to enforce it.
- The data needed to produce this type of information is readily available within the Power and Water Corporation financial systems and could be provided if required. If the Legislative Assembly should desire the corporation to publish information about segment performance it could be achieved by ministerial direction.
The Auditor-General is saying it could be done with a ministerial direction. We could achieve what the government wants without spending a large amount of money and still have competition. This is not the same as the situation in Tasmania. It was dealing with disaggregation as well as the issue of bringing competition into the market. When I sum up, I will come back to whether we can do it within divisions using the advice from the Auditor-General, still have competition and do it in a way which will not cost us as much money.
The Treasury said industries will not come unless they have access to the most efficient electricity services. Why did ConocoPhillips turn up? I know it can produce its own power now, but it did not have that capability when it first arrived. I do not know whether INPEX is now producing its own power, but it still came. We have had some big companies come to the Northern Territory, they have negotiated an electricity price with Power and Water and been competitive. I do not accept this has necessarily stopped big companies coming.
Power and Water, in its statement about why this is a good thing, said it will provide greater transparency. Mr Clarke has said it has nearly achieved that transparent separation and it will increase efficiencies.
These are people who know about efficiencies, so they should be able to tell me where they will occur in Power and Water, but unfortunately that is one of the big things missing in this debate. Show me where efficiencies will come from. The Public Accounts Committee has discussed that. People might think I look at things a bit simply, but generation, for instance, which you would imagine is fairly straightforward, is a matter of buying some gas, putting it into a generator and electricity is produced.
I thought that would be fairly simple, but it is not. When he was talking about this at the hearing, Mr Tregilgas said he was not privy to the gas contract, but he did know Power and Water had not been taking all of the contracted amount of gas, so there was a penalty borne by taxpayers.
We have not had a chance to look at that issue, but it is a very important one which needs debating. We have only had one meeting to discuss this matter, and we now find out Power and Water has not been using all of its gas and has been penalised for it. It would be nice to go into that, see what the reasons were and how this fits with the mix of competition.
There are issues of wholesale and retail pricing. There is the issue of how much gas Power and Water has to spare, so if Northern Power comes into the market, can it buy excess gas from them? If they can buy gas more cheaply than Power and Water buys it from itself, why are our prices higher than what Northern Power is selling it for? They might sound like silly questions, for the experts, but for me that is an area here which has not been discussed.
The government is saying it will introduce efficiencies. How does this work in practice? We have not had enough of a chance to dig into this properly to find out if that will be the case. How will Northern Power work in the market? There are a number of concerns in that area as well. If Northern Power takes even a quarter of the power of Power and Water, what is the story with generators?
There is some discussion that some of those generators could depreciate and be mothballed. I will leave the accountants to work that out, but if you have paid $200m over the last few years for your generators and they have not reached the end of their life but are no good because someone else has come into the market — I know it is said that you can depreciate that figure, but you must have paid for those generators, and somewhere along the line that is part of the debt. Somehow that debt still has to be paid.
The other side of that is if Power and Water has fewer customers, that means less income and profit. The argument is that Power and Water will be able to run generation more efficiently. That may be the case, but no one has shown me how that can happen, especially if you still have to run generators at night, for instance.
I am disappointed there has not been adequate time for members of parliament, who are not all experts in electrical distribution, to go in to a lot more depth to see if it really is the case we can have improved efficiencies in the generation of power. It might be; I am not arguing that it could or could not, but we have not had the chance for a generation expert to show us if Power and Water loses the Army, Parliament House and something else to QEnergy, it will be able to make the same amount of money by becoming more efficient in production
There are people with more brains in this than me, but that is the way I see it. The problem I have in trying to support this motion is that we have not had a chance to see that what you are doing stands up to what you say it will do. I have tried to keep an open mind on this because I support competition, but I will not go down the path of changing Power and Water based on nice sounding things, or thinking that because someone else did it, it will work in the Northern Territory and make it more efficient. Where are the inefficiencies? I have not received any proof there are any and that concerns me.
Whether this is a road to privatisation is a difficult area. Many people say it is because the Treasurer stated privatisation would not be something he would deal with in the life of this parliament, hinting it might be something on the cards at the next election.
There is an area in this bill about changes to the corporate structure. I have heard people say not to worry about that; it is where you can transfer assets from one government owned corporation to another, to a subsidiary, a corporate or any other Territory body, and there have been concerns that, within some of those definitions, it could mean a private company. I am not a corporate lawyer; I have been trying to find some corporate lawyer-type definitions from Google and you must pay hundreds of dollars because they do not give them away for free. I did not get far trying to find out what some of the definitions meant, but, again, if we had a bit more time we could have some corporate people in to explain any loopholes in this legislation that would allow the government to sell this without coming back to parliament.
We go on what people say, and I am not saying they are not telling us the truth, but some of them are saying what they believe. Sometimes on these difficult areas it would be nice to get a second opinion.
It concerns me that it would be much harder to break up Power and Water for sale if it was left in its divisions where it had a clear ministerial direction that it must show those divisions – as mentioned in the Auditor-General’s letter to me – and it has shown them in years gone by.
I cannot see why that still could not occur along with competition. Instead of trialling disaggregation the same way as Western Australia, trial the breaking up of divisions according to the process the Auditor-General spoke about. Trial it for five years so divisions are transparent, as Mr Clarke said has nearly been achieved, and to stop it bouncing back into old habits. The minister can give Power and Water direction it must continue with that process.
To have three boards disadvantages Power and Water; what we are saying is, ‘You will act as a company and generate and sell electricity just like any other company, except you will be owned by the government’.
Why put more stringent controls on Power and Water which would not be applied to Origin Energy? Origin Energy has one board and they talk to one another. We have three boards and, according to the way it is here, they will all be fighting for the bit of their company to make sure it is going well and is competitive. You do not want over-competition within your own company; you would like to know what the left and right hand are doing. I looked at Ergon, the government owned company in Queensland, which has one board. I am a little confused as to why this model is the only model we must agree with.
I heard the minister speak today about how, for the last 15 or 20 years, other governments have brought in these reforms. He also quoted from a congratulations letter from all of the fellows there, giving them a pat on the back and saying how it is terrific this is being brought in after all this time. He has not told us why this would make a difference, and it is not the same as New South Wales, Victoria, Queensland, Tasmania and South Australia. We are an isolated area with 83 000 customers, and we have some special difficulties producing electricity in this part of the world.
Do not play me off as a dill, because I am taking this debate as seriously as I can. I am trying to save taxpayers some money, about $7m, by asking, ‘Can you achieve the process you want?’ You have competition, so let us not argue completion is not available to people who want to come to the Northern Territory. All you are arguing is that by splitting it up – everyone has argued this – it will become more efficient, but you have not showed me the inefficiencies. You said this will encourage a more competitive market; you are saying the market cannot see the transparency in Power and Water unless we break it into separate companies. Yet, the Auditor-General said we used to do it and Ken Clarke said we are doing it; we are that far away from ensuring those divisions comply with the complaints and concerns of QEnergy and your friends in Canberra who wrote the nice words …
Mr Tollner: COAG.
Mr WOOD: COAG, yes. COAG is not the end of the world, and you have stood on this side bagging it out when it did not suit you.
One good thing about living here for a while is you hear lots of stories on one side which are completely reversed on the other, but that is another matter.
Why will you not trial what the Auditor-General is saying can be, and was, done? The divisions are clear; you do not have any extra boards. I cannot see private companies taking on our version of running an electricity company through three boards. That is bureaucratic and inefficient – three boards, three administrations and three lots of computers
Mr McCARTHY: A point of order, Madam Speaker! Pursuant to Standing Order 77, I request an extension of time for the member.
Motion agreed to.
Mr WOOD: Thank you, member for Barkly, I will sum up quickly.
I am knocked, because people say I sit on the fence, but I do not. I will not support the disaggregation you are undertaking, because it is a waste of money. You can do it, as I said, by breaking up the divisions and ensuring, as Treasurer, you give a direction where those divisions must show their accountability and transparency. Stay with one board, otherwise you are uncompetitive with other companies. If we say we will be competitive in the open market, at least look like it. It should not look like something the open market would not take on.
I support competition but have not seen evidence of where inefficiencies are. I have not seen that breaking up divisions through an accounting process, meaning they do not need separate boards, will not achieve what you are trying to do. I am not against what you are trying to do, but it is a long-winded, costly and bureaucratic process to achieve something the Auditor-General says you can achieve now.
If you want to try something, bring in that model for five years and trial it. Western Australia trialled its disaggregation model for eight years and has now turned back on it. Let us try something Territory-style; do not waste money; it is only a small company with 83 000 customers. You should trial it instead of going through what I call a wasteful and inefficient process where we can achieve it by doing something in a different way.
I will not support the changes. I am not sure I agree with Labor about privatisation as I have no proof that what I see, even though NewCo said – the number in the section talking about the transfer of regulations probably included some luxurious things which did not need to be there, because the main key is the transfer of one GOC to another. I am not sure about that part of it.
Treasurer, this bill is important for the Territory and the many people concerned about it. They do not have the chance, like we do, to go through these things carefully. I am disappointed we have not spent the required time on this bill.
We were told during the sittings that the 1 July date is just a nice date and you want to introduce these changes on 1 January next year. It is a pity we could not have looked in depth at what this means. We could have gone interstate and talked to Origin Energy, Ergon or maybe some of the national electricity people. We could have asked their opinions, because I do not know. It would be nice to hear second opinions, because this is a difficult area. I do not want to see Power and Water go broke. I do not want to see the people of the Northern Territory paying higher tariffs because it is making less profit, or paying a bigger subsidy because tariffs are the same. Those questions need answering as well.
The Treasurer will say, ‘Well, that is the way it is and that is the way it is going to be’. I hope he gives serious consideration to holding off on this and perhaps allowing the Public Accounts Committee to investigate further. I know the chances of that are not great, but I would have loved to speak to these companies quoted as saying, ‘This has happened for 15 or 20 years out there’.
Let us go to Victoria and see whether that is the case. I do not know what the member for Port Darwin was laughing about, but I pulled out a document which is available on the web. It compares the cost of electricity in 91 countries, states and territories, and includes Victoria, and will explain people the comments I made when the member for Port Darwin was speaking.
This is a document called a ‘Report to the Energy Users of Australia’ from March 2012. It has a series of graphs in it called ‘country comparisons’. Figure 3 is a comparison of household electricity prices in 2011 for 91 countries, states and provinces. In the comparison it shows the ranking of each jurisdiction from highest to lowest prices; Australian states and territories are marked in red.
I will see if the summary is on the back and I will read from there. The highest household electricity prices by country in 2011 were: Denmark; Germany; South Australia; New South Wales; Victoria; and Western Australia; these are four states which have introduced the changes we have talked about as being beneficial. We then have Cyprus, Belgium, Japan, Norway, Tasmania, Sweden, Italy, Austria, Spain and Queensland. After those we have Malta, Ireland, the 27 EU countries, the Netherlands, the Northern Territory, Luxembourg, Switzerland, Slovakia, United Kingdom, Portugal, Hungary, New York and the Australian Capital Territory. Even New Zealand is cheaper than us, as is France, California and Estonia, which probably receives special gas prices from Russia. Mississippi is cheaper and at the bottom is Washington. We talk about the advantages of privatisation and what we are doing, but four of our states which have been in the business for a while are at the top of this list. If I am a bit concerned about statements made without proof, that is a classic example of where I am coming from.
I am sad the bill has not gone through the much more detailed and thorough process it deserves. There are many questions that need answering. I hope I have put a positive alternative to the minister; I am not here just to knock you. Taking this seriously, there is a cheaper alternative which is more sensible, and if you trialled it for five years – competition still exists, we have not gotten rid of it. You and companies want transparency to ensure Power and Water is doing the right thing. Do not turn it into a bureaucratic nightmare, with all of those boards and extra administration. Keep it simple, make it transparent and let us do something different and better for the Territory than what is proposed today.
Mrs LAMBLEY (Health): Madam Speaker, I support the Treasurer and Shareholding minister’s Power and Water Corporation Legislative Amendment Bill 2014 (Serial 63).
It is fascinating listening to this debate. We have been in government for around 18 months and the first thing we did was undertake a thorough and forensic analysis of the finances of the Northern Territory, similar to the National Commission of Audit report recently handed down by the federal government. This was undertaken by a group of gentlemen who have been referred to as the Renewal Management Board.
Ms Lawrie interjecting
Mrs LAMBLEY: The Leader of the Opposition can giggle, sneer and criticise the Renewal Management Board, but it effectively did what the National Commission of Audit commissioners has done for the federal government. It analysed our financial position.
After 11 years of Labor we invested a significant amount of money in employing a group of highly skilled and professional gentlemen, as they happened to be, to undertake a deep and thorough analysis of the mess left by the opposition. Those gentlemen are Alan Tregilgas, Ken Clarke, John Gardiner and Dr Neil Conn, who spent months looking under every stone, into every crevice and every corner of what had been left by Labor.
Ms Walker: What were they being paid? It was squillions.
Mrs LAMBLEY: They were paid exactly what they deserved. They are highly distinguished, professional people, and they found that through 11 years Labor it made literally no decisions, particularly when it came to the Power and Water Corporation. It left it in a diabolical state and failed to make decisions which could have saved the Territory a hell of a lot of money.
The Renewal Management Board spent probably over 50% of its time just looking at the Power and Water Corporation. From memory, it discovered that at the time of the change of government the Power and Water Corporation was contributing something like 40% to the debt of the Northern Territory.
The Independent member for Nelson asked where the inefficiencies are and why this is such a problem. The Renewal Management Board spent six months defining what the problems were. We have undertaken quite a bit of reform already, but at the time of the change of government the problems and inefficiencies existed from the top of the organisation right down to the bottom. That was documented to some extent in the first report delivered by the Renewal Management Board, and I am sure some of you in this Chamber have a copy of that. It defined, at that early point in time, that the Power and Water Corporation was the problem of this government. It was the main cause of our financial hardship, the fact we were facing an enormous escalating debt, as well as an unsustainable deficit.
We have been on this agenda of structural reform within the Power and Water Corporation from day one in August 2012. The member for Nelson is deluding himself by claiming it has come suddenly, without notice and sufficient time for him and others to preside, for even more time, over these structural changes and essential reforms. We have spent the last 18 months in this Chamber talking about the fact the Power and Water Corporation needs fixing. I do not think anyone in this Chamber could say that is not the case if they have been following the debate and reading the documents available to the public. We need to fix the problem; the Treasurer, the shareholding minister for the Power and Water Corporation, is getting on with the job and I applaud him for that.
Time is something we do not have. We had 11 years of Labor creating the problem. The former shareholding minister and Treasurer, now Leader of the Opposition, presided over a deteriorating corporation. She did not make decisions; she sat on her hands, despite the advice given to her by key players in the organisation.
We studied correspondence between the shareholding minister, the member for Karama, and the Power and Water Corporation board around the years 2010-11, and she was told she must do certain things to rescue Power and Water from falling into the pit it now has.
She could have saved the Power and Water Corporation from the serious financial state it is in, but did not. I do not think she knows how to make a good decision to save herself. When we started referring to the Leader of the Opposition, in the early days, as the worst Treasurer in the history of the Northern Territory, we were not joking. There is plenty of evidence to suggest that was the case.
The Leader of the Opposition had every opportunity to reform the Power and Water Corporation, to stop it from falling into a financial cesspit, and did not. She chose political expediency over doing the right thing and showing good fiscal management, and that is what we are talking about today. We are talking about making responsible decisions for the future of the Northern Territory, decisions Labor cannot make because it is all about pleasing people and keeping tariffs low. The former Treasurer was told, ‘You have to increase tariffs’. The Power and Water Corporation was commercially unsustainable, and to bring it up to any sort of parity, anything which looks close to coming in on budget, she had to increase tariffs, but she could not, because she was unable to make a responsible economic and financial decision. She was more worried about winning back her seat. That is politics; it is all about winning your seat back and keeping everyone happy. However, at some point you have to do the right thing, and Labor proved it was unable to do that.
There are many more examples of that outside Power and Water. Even in Health I have uncovered many things Labor sat on. It could not make a decision to save itself; it could not make the tough decisions.
On this side of the Chamber we feel we have a responsibility. We have been given this great honour, a four-year term to change things around, steer the boat in the right direction and fix the problems of Labor. Historically, that is what conservative government have always done. I know that, but we inevitably inherit fiscal basket cases …
Ms Walker: What about the black hole of 2001 Labor inherited from the CLP? Have you forgotten about that little …
Mrs LAMBLEY: … turn them around and then Labor comes in. That is the cycle of politics. I cannot hear what the member for Nhulunbuy is saying, but I have obviously pressed a button again.
The bottom line is we are intent on changing the culture of the Power and Water Corporation. We are about reforming the system so it is not such a burden on the people of the Northern Territory. It is difficult to understand, particularly when you sit in my electorate of Araluen, Malak, Gove or wherever you live, why increasing the cost of power and water in the Northern Territory is a good thing for everyone
If we do not act responsibility and try to make things more economically viable, it is a cost to Territorians through interest repayments we must make on our exorbitant debt inherited from Labor. We are, as the Treasurer has said time and time again, living beyond our means. Federally, we hear Joe Hockey tell us we are living beyond our means. The Power and Water Corporation is a classic example of how we are living beyond our means. We cannot afford to sit back and allow this corporation to fall further into this diabolical financial situation.
We have done our research and asked the Renewal Management Board to perform the preliminary investigation into what was happening in the Power and Water Corporation. As a result, we made some bold decisions which went down like a lead balloon; I am the first to admit. In the mini-budget in December 2012 we adjusted those tariffs. The former Treasurer, the member for Karama, was impotent and could not do it; it was beyond her. We did what was prudent and responsible by adjusting the tariffs. It was hard for all of us, but …
Mr Vatskalis: You then lost your job.
Mrs LAMBLEY: It was our job, that is right. We had to commence fixing the problems in the Power and Water Corporation. We took the advice of other people.
We commissioned a consultant, Marchment Hill, which told us how we must make other types of reform within the Power and Water Corporation. One thing spelt out to us very early in the piece was that the Power and Water Corporation cannot operate at a full commercial level. The problems were across the board and reforms had to be made. A comprehensive energy and water policy needed to be established. There were all sorts of recommendations at the time: the Power and Water Corporation board must implement appropriate and accurate financial management measures to address all identified deficiencies; pricing decisions are to be undertaken to start to bring the corporation into line; and the Power and Water Corporation is to be separated into different areas of functioning to change the culture of the organisation, eliminate financial confusion – which certainly existed when we inherited it – and to simplify the regulatory function.
The recommendations were not rocket science, even in the early days. It was about falling into line with what was happening interstate, and we have had some feedback, as mentioned this afternoon. We have had feedback from our counterparts in other jurisdictions to say, ‘Time is up, Northern Territory, get on board. You have to start reforming and separating the structures of Power and Water Corporation in line with the sentiment of COAG.’ We have had lots of feedback from the Treasurer as a result of the meeting he went to recently with his counterparts; he said that across the board there is great understanding the Power and Water Corporation cannot continue as it is.
The Power and Water Corporation is costing us a bomb as it functions at the moment. The arguments we hear from the member for Nelson and others across the Chamber that reform and restructure will cost a bomb and are not worth it, or there is no value in it, are nonsense. You must look at the bigger picture; if we undertake reforms now, separate it and make it more transparent to bring it in line with utilities across Australia, there are greater efficiencies to be made. You can argue whichever way you like, but that is the bottom line from all consultants we have employed, such as the Renewal Management Board. The Renewal Management Board consisted of people with a lifetime of experience in the utilities industry, and they said this is the way to go. It has happened elsewhere and this is what we need to do.
I fully support the Treasurer’s work in this area. It is very difficult, taking on not just resistance from the opposition and some Independents, but also a very big and powerful workforce. The ETU is also involved and it is very vocal, jumping up and down when it feels its turf is being changed in any way. I respect it for the role it plays in representing the interests of workers, but I cannot see there is any argument beyond reforming the Power and Water Corporation. From the expert advice we have received for a long time now, we are on the right track. It has been reaffirmed and endorsed by our counterparts across Australia. We need to get on with it, stop wasting money, make sure these efficiencies are brought in from the top to the bottom, and in the future we can hopefully enjoy a Power and Water Corporation and various entities which run far more efficiently than what was ever seen under the former government.
Ms LAWRIE (Opposition Leader): Mr Deputy Speaker, what an extraordinary contribution from the former CLP Treasurer, lacking in detail and any analysis or understanding of the objectives of her government in the separation. It is little wonder she walked out on budget Cabinet all that time ago, and the role of Treasurer, which saw a succession of Treasurers until we came to the member for Fong Lim, who brings his own style to the position.
The three bills before the Assembly will hurt Territory families and businesses, but the member for Fong Lim sits there chuckling. He has little care for the impact it will have on Territorians. The government says the split of Power and Water and the creation of GenCorp and RetailCorp will put a lid on power prices, as well as downward pressure on power costs. We know it will not; the inevitable consequences of this split will be increased power prices, reduced reliability of supply and, definitely, job losses. Job losses are somewhere in the vicinity of 400 to 600; it is still guess work, but that is the reality.
When people go to the polls in 2016, that is what they will have witnessed and you will be brought to account by Territorians for your actions. These are people whose livelihoods are in the Territory, who earn and raise their families here, and you will take an axe to their jobs. We know you are, and we know you have given that task to the three new boards of the Power and Water Corporation, GenCorp and RetailCorp. You are arrogant in your approach to that, Treasurer, but I also know a large number of people live and work across our Top End community. Those jobs exist in the Top End in large numbers and they sit in seats where your members are already exposed and vulnerable.
You are using your numbers to push through this split of Power and Water, not even waiting for the scrutiny of the Public Accounts Committee and the report of the inquiry it undertook. You are so arrogant in your actions and you will be held to account. You cannot be stopped here because of your numbers, but you will be held to account by the people who will lose their jobs, and they go to the hundreds. They are not going to pack up and leave the Territory. They are skilled in their capacity. They will be picked up and absorbed into industries feeding off the major project you will never speak of. You cannot abide the fact it was a Labor government which brought economic growth to the Northern Territory, figures which you love to chant. It is called Ichthys and the companies are INPEX and Total.
Here we are, with the split of Power and Water, and we know hundreds of Territorians will pay the price with their jobs. Families and businesses will pay the price in the inevitable tariff increases. When asked by the media some time ago, the Treasurer plucked out a figure of $2m as a guess of how much the Power and Water split would cost. Lo and behold, at the inquiry, with some questioning, it was discovered it is currently $7.8m. That does not include costs associated with the new billing systems which will occur, the new IT systems, and these are what I call year three costs. They are not countenanced in the questions and detail of the inquiry, but they exist and will have to happen. Your advisor, Mr Tregilgas, gave us a clear view in a briefing that the full and total separation of these corporations will have to occur, including billing systems and the like. That, as we know, is when all of these costs will happen. That is when your $50m-plus costs start to ratchet up, and someone will have to pay. It is Territorians who will bear the brunt of the decisions you are making, decisions based on support from a parliamentary wing which has not been given full access to the detailed information it requires to make a fully informed decision.
The parliament today has not had the opportunity to debate any reports from the Public Accounts Committee. You see fit to breach every parliamentary process and convention. When you have a parliamentary committee inquiry into an agenda like splitting up Power and Water, it is always the case, unequivocally, that the inquiry’s report is dealt with first so members of parliament not on the Public Accounts Committee can read and digest it before making a more informed decision. Not with this Treasurer and government; they are rushing ahead with splitting the legislation before the inquiry has been completed, before the report is delivered and before a more fulsome debate can occur.
It is little wonder members who have been in this parliament for a long time, like the member for Nelson, are in abject disgust at the processes which have failed to properly occur in the Chamber today. I share the deep concerns of the members for Wanguri and Casuarina, who have sat on the Public Accounts Committee inquiry and who, as we have seen through televised public hearings, have not received any evidence supporting the split.
When you sought evidence you were told, ‘Well, we have been looking at it for over 10 years and there is some information around that you would consider’. That is not evidence; those are weasel words. Evidence would be a cost-benefit analysis, but you would not want to do a cost-benefit analysis on this, would you? It would show you significant costs will be incurred by Territorians in the split of Power and Water, costs which have not been disclosed and were not disclosed at the Public Accounts Committee inquiry, to the eternal shame of the officials involved for not providing more fulsome responses about year three costs and beyond. When Labor is in government again, because we will work hard to capture the trust of Territorians at the next election, we will not let this go. We will inquire into the full costs of a split of Power and Water.
Territorians have every right to know the costs of the split of their public utility. The CLP did not go to the election seeking a mandate …
Mr ELFERINK: A point of order, Mr Deputy Speaker! I have just heard the Leader of the Opposition refer to the eternal shame of the officials involved, which amounts to another attack on public servants of the Northern Territory.
Madam Speaker has made it clear such comments should be restrained, and there should be an opportunity for public servants to go about their business without being attacked by the Leader of the Opposition for political reasons. She should withdraw those comments.
Ms Lawrie: They are not in breach of standing orders. I did not name people.
Mr ELFERINK: You are a grub of the lowest order; you do not restrain yourself at all. I cannot begin to imagine the people you are lining up and targeting for execution after the next election …
Members interjecting.
Mr DEPUTY SPEAKER: Can I have everyone seated, please?
Mr Vowles: You attacked the member for Nelson.
__________________________
Suspension of Member
Member for Johnston
Suspension of Member
Member for Johnston
Mr DEPUTY SPEAKER: Member for Johnston, I asked for everyone to be seated. I would like you to leave the Chamber for one hour, pursuant to Standing Order 240A.
__________________________
Mr DEPUTY SPEAKER: Leader of the Opposition, in future please be careful with your words.
Ms LAWRIE: I believe it is beholden on people to be fulsome with information provided to the Northern Territory. That is why I am deeply concerned no cost-benefit analysis has been provided by the CLP to support, in any way, shape or form, the decision to split Power and Water. The full cost will one day be known.
Fortunately, we still have, though God knows for how long under the CLP, scrutiny provisions of Power and Water. We expect to have, until sold, scrutiny provisions of GenCorp and RetailCorp, and we will be seeking, year after year, the full costs of the split of Power and Water. The truth will out. The architects of this burden on Territorians will be identified: the Treasurer, the architect; his sidekick, the Chief Minister; and their supporters. I find it amazing the former Treasurer quotes the Renewal Management Board, whose members we refer to as the ‘million dollar mates', who provided an interim report which no one with any genuine economic credibility could recognise as a thorough, analytical piece of economics. In fact, people from universities around Australia could not believe people put their names to it.
The former Treasurer, now Health minister, likened it to the Commission of Audit undertaken for the federal government. The Minister for Health likened that vicious blueprint attacking the fundamentals of Australian society to the Renewal Management Board’s interim report.
At least the federal government provided a full copy of that report into the public domain and allowed its author to be questioned. That is not like the CLP; it could not go that far. The interim report was four flimsy pages, not the full one. We are still waiting for a final report. At estimates last year we were told by the Chief Minister that the final report went to Cabinet and he would consider whether or not it would be released. Today there is still no final report from the Renewal Management Board. Is it that bad? Are you that ashamed of it? Does it really exist? These are questions we still have in opposition because unlike the federal government, which was prepared to stump up its Commission of Audit for full scrutiny and put it on the public record, that has not happened under the CLP.
We heard the predictable attack on me by the former Treasurer, now Minister for Health, who said I did nothing with Power and Water. It flies in the face of fact, ignores the financial review undertaken by Andrew Reeves at my instruction as Treasurer and ignores the fact that for the first time in 20 years, under me, significant tariff adjustments occurred, with 23% on power and 30% and 40% on water and sewerage in total.
As Treasurer I made the most significant tariff adjustments in 20 years. The CLP had stripped more out of Power and Water in dividends than it had put in, and the Labor government, from 2001 onwards, inherited a stripped down, run down Power and Water Authority requiring significant improvements across water, sewerage and power, specifically in networks and generation. It was clear we had to embark on a $1.5bn investment through capital, and repairs and maintenance, as a result of the catastrophic failure of the Casuarina Zone Substation, and a report undertaken by Merv Davies. This blame game ought to have stopped
a while ago, but that is all the CLP has to rely on for its mantra and rhetoric.
Power and Water was run down through the 1990s, having been built up by the CLP during the 1980s, hitting critical failure point in the mid-2000s. This prompted a necessary 20-year injection of capital, and repairs and maintenance, to rebuild infrastructure, including networks, at a time when the Northern Territory was going through dramatic population growth in the Top End, particularly in the Palmerston region, hence the requirements for new zone substations at Archer, at Lee Point and the complete replacement of the Snell Street zone substation. There was also the work done on the City Zone Substation, Casuarina and the list goes on.
Sadly for Territorians, the CLP stopped that massive program of maintenance at zone substations, hence Hudson Creek has significant points of failure, which we experienced with the catastrophic 12-hour blackout. That is the situation you reach when you stop a necessary rebuilding program which was under way as a result of Merv Davies’ advice.
What do we have? When the CLP came to power it produced a ‘million dollar mates’ quickie report to tell it what it wanted to hear: ratchet up Power and Water tariffs. When we sought advice from Mr Tregilgas at a briefing about what evidence, information and analysis that 30% power tariff increase was based on – when the former member for Blain was Chief Minister – he advised there was not sufficient data and information available, so they took a guesstimate at what interstate tariff increases had been.
I wrote very clear notes at that meeting. Mr Tregilgas, if that recollection is wrong I am more than happy to enter into correspondence with you, but we received advice that a 30% increase in power tariffs was a guesstimate based on what they had seen as average interstate tariff movements, not on any expert evidence and analysis. We were told the view was that there was not sufficient data available within Power and Water to achieve that level of analysis.
I queried that, given that Andrew Reeves, the former Utilities Commissioner who undertook the financial analysis of Power and Water, provided a fulsome report to our government justifying tariff increases that occurred in 2009. These were two very different approaches by two governments, one based on analysis by the Utilities Commissioner, the latter by the CLP on a guesstimate of tariff increases interstate. What has that meant? Families are now paying about $2000 a year more for their power bills. To families in the real world that means they are starting to hit the wall with their cost of living.
Affordability has been stripped out of the family budget and people are suffering. People are literally turning off everything they can, but when you have babies and little children and there is very hot weather, air conditioning is not a luxury, it is a necessity. For families who have sick children and require a more stable living environment, air conditioning and attendant medical support equipment is not a luxury, it is essential.
None of this has been taken into account by the CLP government in its headlong pursuit to split Power and Water, and its desire not to be acquainted with the impact which will flow through to Territorians. If you did not know, plausible deniability exists, and when it starts to come home to roost you can say, ‘Well, we were not given that information then’.
The introduction of these bills in February saw many attempts to have them referred to the Public Accounts Committee, and it was ultimately the persistence of my colleagues, the members for Wanguri and Nightcliff, joined by the member for Nelson, which saw them sent to the Public Accounts Committee for scrutiny. At the time the government had lost majority numbers in the Chamber and was starting to look like it might need a minority government agreement with the member for Nelson. It was because of that this was brought before the Public Accounts Committee as well. However, as we have seen today, the inquiry was not welcomed by the government. It allowed only one day for an inquiry of such magnitude. That is unheard of in the Territory. Inquiries of that sheer size and nature last several days over several weeks.
The action of the government to proceed with this debate before inquiry information is even delivered to parliament speaks volumes.
When questioned at PAC hearings, key witnesses from government agencies confirmed, as I said, that no cost-benefit analysis has been created for the split. That is extraordinary and unheard of. In its submission to the inquiry, NTCOSS said:
- It appears to NTCOSS that the NT government is pursuing efficiencies while adding risk to the market through opening up competition at both the generation and retail levels, and at the same time asking investors to contribute very significant levels of capital. Economies of scale considerations will be critical for the NT, as a very small population base across a very large expanse.
Let us put that in context; Western Australia has struggled with the economies of scale issue and is now trying to remerge its generation and retail. It is called a gentailer; it has not worked.
There are many examples of failures occurring due to the lack of economies of scale and we are right there in that picture. Yes, it will help someone who buys generation to make a motza. Territorians will bear the burden of that windfall to that commercial operator.
As I mentioned in Question Time this morning the Utilities Commissioner has also expressed concern about increased costs arising from the loss of economies of scale and scope in a small market like the Territory.
The Treasurer could defer these bills and undertake the analysis recommended by NTCOSS, part of a wider cost-benefit analysis. However, he will not do that.
In a submission to the inquiry, the Electrical Trades Union, among other concerns, drew the PAC’s attention to the absence of a cost-benefit analysis or evidence-based approach to the split. Its submission states:
- Taxpayers are being asked to sign up to the reforms on the basis of blind faith. The detailed arrangements of the reform are being left to develop throughout the implementation phase, thereby avoiding prior scrutiny
There has been no evidence provided that lower electricity costs will result from these reforms. In fact, evidence from other states points to the contrary.
One of the things we find most galling is the charade by the Treasurer that this will somehow put downward pressure on tariffs, when evidence in every other jurisdiction in Australia and overseas shows the exact opposite. Tariffs have increased. How dare he continue to be so deceitful to Territorians, but that is his form.
In addition to submissions from the non-government sector, there was widespread incredulity in the NT public service and the Power and Water Corporation that the substantial policy and fiscal agenda inherent in these bills has not been subject to a rigorous cost-benefit analysis. Treasurer, how much will power bills go up for small businesses like coffee shops, restaurants, motor vehicle workshops and retailers when the full cost of splitting up Power and Water is passed on to consumers? There is no answer. You do not want that answer and you do not want to be that honest with Territorians.
Other aspects of this bill have been brought into sharp focus by the PAC inquiry. Eight months ago the Treasurer confirmed the government had commenced discussions with private sector entities about entering the Territory’s electricity market when Power and Water is split up, but in usual CLP style he declined to say who he had been speaking to. When questioned about this during the inquiry’s hearings, the Executive Director of NewCo in the Chief Minister’s Department said:
- The substance of those discussions with competitors is commercially confidential, but I can assure you that from the generation perspective there are discussions with alternative retailers and from the retail perspective, there is discussion taking place with an alternative generator. Each of these two new businesses’ interests are to encourage competition in their area of resourcing generation for retail and in the retail end of the spectrum for generation. These are continuing.
What does this mean? The short answer is that while the Treasurer is pursuing an agenda to sell Power and Water assets, discussions have been going on behind closed doors with private sector interests. Territorians are being kept in the dark about what is on the table and what deals will be done.
Both Treasury and the Power and Water Corporation also confirmed that discussions had taken place with private interests, but the details cannot be disclosed because the substance of discussions is commercially confidential. However, in response to a question from the member for Nelson on the issue of profits when the new GOCs commence operation, the Executive Director of NewCo was more forthcoming. He stated:
- This will be a challenge for these new boards. My advice to these new boards, and it is going to be written into the Statement of Corporate Intent that we will be negotiating and discussing, is that financially sustainable does involve them earning a rate of return on capital employed that is a reasonable rate. So, it does involve profit …
The impact of the Power and Water split will not be limited to the Territory’s cities, major towns and regional centres. Under current arrangements, about $70m per annum is provided by the Department of Community Services for Indigenous Essential Services across 72 communities and 66 outstations. This is supplemented by $40m in direct revenue from prepaid meter tokens, charges to non-residential customers and Commonwealth funding. But when the profitable components of Power and Water are hived off, when we lose generation and retail, Indigenous Essential Services will be sitting in the residual GOC. How does it expand? Where does new investment come from when it has lost its revenue makers?
I am sure members whose electorates cover the relevant communities and outstations will be concerned about what this means for the Indigenous Essential Services program when Power and Water is split up, and when, ultimately, assets are sold. The Treasurer must undertake to ensure adequate funding is available to deliver viable essential services to remote communities and outstations. He needs to make an unequivocal guarantee to this Assembly to do so.
Another relevant development since the bills were introduced is the Utilities Commission’s final determination on network charges. The UC has identified a revenue requirement of $1bn over five years, including a 32% increase in 2014-15. The Treasurer needs to explain whether these charges will be passed on to GenCorp and RetailCorp, and how much will be recovered in dollar terms from Territory businesses and families. There are other significant concerns with these bills. Proposed new section 53A of the Government Owned Corporations Act enables the Treasurer to dispose of Power and Water Corporation assets by regulation, but draft regulations have not been provided to be considered in conjunction with the bills to split up Power and Water. The Treasurer’s unfettered power to transfer GOC assets by subordinate legislation is a blank cheque.
As pointed out by the member for Wanguri, the proposed amendment to the GOC Act permits the shareholding minister, the Treasurer, to issue regulations which could have retrospective application and direct a GOC to do something which would otherwise be unlawful. How extraordinary! These provisions will be of great concern to ordinary Territorians because they form part of the CLP agenda to privatise Power and Water by stealth. Of course you will not be selling the Power and Water Corporation, you will have the new Generation and Retail Corporations for sale. A striking feature of the Public Accounts Committee inquiry into the split of Power and Water was evidence confirming enabling legislation before the Assembly today was outsourced to private sector legal firms, presumably with relevant experience in other jurisdictions.
Given an asset sale agenda is at the heart of utility restructures around Australia, the use of external consultants with relevant legal energy experience does not come as a surprise, although the Treasurer persistently states the split up legislation only permits a transfer of assets between GOCs. Evidence from the Department of Chief Minister and Treasury witnesses to the PAC confirms the bills have a wider scope.
Agencies asserted that the intention of the bill is to allow the transfer of assets to and from GOCs. However, there was no doubt uncertainty about the full scope and intention of proposed section 53A, and whether the term ‘relevant entity’ will facilitate the transfer of Power and Water Corporation, GenCorp and RetailCorp assets to a private entity. When asked why it was necessary to have broader definitions of entities beyond a government owned corporation, the Executive Director of NewCo said:
- … I agree with your point that fundamentally it is a fairly straightforward transfer, by and large, between one government-owned corporation to new corporations and the listing of all the possibilities is not actually essential …
Why then does it exist? When Treasury was asked why it was necessary to go beyond the definition of government owned corporation when defining a relevant entity, the Deputy Under Treasurer said some of this legislation is:
- … not just specific to the structural separation of Power and Water. It has been drafted in a way that has been broad and generic to give government flexibility, I guess, in terms of whatever it wants to do in the future.
Mr McCARTHY: A point of order, Mr Deputy Speaker! Pursuant to Standing Order 77, I request an extension of time for the member.
Motion agreed to.
Ms LAWRIE: These are frank and alarming admissions which contradict the Treasurer’s mantra that he is not interested in selling Power and Water assets.
There are other issues in relation to the split of Power and Water which the Treasurer needs to answer. Evidence provided to the Public Accounts Committee confirms discussions have been held with Northern Power concerning its plans to generate 60 megawatts into the Territory market from a new plant located in Weddell. The Utilities Commission, in its 2013 Power System Review report said:
- The Darwin-Katherine system is expected to have sufficient generation capacity to maintain supply under any credible electricity demand scenario despite the loss of the two largest generation units in the system (an N-2 event) through to the summer of 2019-2020, given the commissioning of Weddell Unit 3 in April 2013.
Does the Treasurer agree that any loss of generation market by Power and Water or the generation GOC during the next five years would result in stranded assets and a write off in asset values? If the loss is 60 MW this could be as high as $120m.
Higher costs of the GOC – because of the take or pay obligation under the gas contract it would be using significantly less gas but still have a minimum take or pay obligation, and the inability to run plant at optimal efficiency levels which increases your repairs and maintenance costs. I ask the Treasurer to confirm whether these significant costs have been quantified and considered by government. If so, will the Treasurer provide the relevant details to the Assembly during the course of this debate?
Before I finish I want to make some observations about the emasculation of Power and Water and its staff, and the absurd deadline of 1 July to achieve the split. Since he first announced the split of the Power and Water Corporation, the Treasurer, the member for Fong Lim, has been attacking the corporation and its staff with vile descriptions; ‘bloated’ is one of his favourites. Professionally and widely respected employees have been sacked, as well as competent and experienced board members; competent interim board members walked away in disgust, and the Treasurer is now demanding a sweeping program of structural, legal, administrative and organisational change be undertaken within the next eight weeks.
This is on top of plans for Power and Water to enter the National Energy Market, and to implement the Utilities Commission’s recommendations arising from the major blackout on 12 March this year. The split of Power and Water is ill-conceived and rushed, and the core functions of the corporation will be compromised if they are to meet the 1 July deadline.
We know a cost benefit or risk analysis on the split of Power and Water has not been undertaken. We know that secret discussions have been held with private sector electricity interests behind closed doors.
We know the bills provide for the transfer and sale of Power and Water assets by regulation. By the stroke of the Treasurer’s pen, privatisation can occur.
We know the Chief Minister and Treasurer have backflipped on their commitment not to privatise or sell Power and Water without a mandate from Territorians at a general election. They are not ruling out selling public assets, and we know, sadly, the CLP cannot be trusted with the Territory’s public assets.
We do not support these bills that will allow the privatisation of our assets with a cost impost on every Territorian, including a significant reduction in reliability, when this government has no mandate to do this. It has not taken it to Territorians to seek their views and their permission, and this government has done everything it can to hide appropriate scrutiny of this in any meaningful way.
I have seen some bad decisions taken in the past by CLP governments. I have never seen anything as disgraceful as this.
Mr VATSKALIS (Casuarina): Mr Deputy Speaker, I listened to the debate from both sides; I was also on the Public Accounts Committee where we interrogated a number of government officials from the public service and Power and Water, and I listened with great interest to what they had to say.
Looking at the legislation, you might think it is an attempt to make the Power and Water Corporation more efficient, and that is the argument the government has brought before the House. The Treasurer’s mantra is that Power and Water is not efficient, there is no transparent financial accountability, somehow it is overloaded with staffers and something needs to be done to provide the opportunity for lower power prices for Territory consumers.
The Treasurer also said there has been a change in the power and energy market environment in Australia which started 20 years ago, and asked where Labor has been all this time and why it is resisting competition. Let us make some things clear. It was a Labor government in Western Australia which split its power and water provider to include competition. It was a Labor government in Canberra which sold the Commonwealth Bank to bring competition, so the mantra that only conservative governments bring competition to Australia is false.
We also hear about competition. Hold on a minute, I have been in the Territory for 22 years and I have a long memory; I came here when the CLP was in power, as it was for 27 years, and it was at that time reform started in Australia. I cannot remember any CLP government coming to parliament and introducing any legislation with regard to Power and Water to increase competition and bring down prices. On the contrary, it was a CLP government which did everything possible to stop any other companies entering the Territory market to sell energy because it did not want competition.
That company was Paul Everingham’s; he had a generator at Mount Todd and asked for access to the cables and wires of Power and Water to sell electricity. It refused to provide access to the network, and as a result he took us to court. In 2005, the Labor government was forced to pay $60m compensation to Paul Everingham because the CLP government stopped him accessing our network.
With regard to the member for Araluen’s comments, there was competition in Alice Springs. There was a power generation facility in the Brewer Estate which the CLP had engaged at an extraordinary price, and a colonial contract we could not break until it finished. It would have been too expensive. That company was selling power to the Power and Water Corporation at a very high price, take or pay. It is extraordinary the CLP government would advocate for competition and accuse us of causing strife in it.
Why did Power and Water fall into so much strife? Let us look back. Power and Water was established by the then CLP government; it amalgamated sewerage, water and power, and created utilities. Unfortunately, before 2001, the CLP government of the time embarked on a big effort to reduce staff in Power and Water, cutting maintenance workers and not taking on apprentices. It did not put any money into Power and Water. Instead, it bought a private power line between Darwin and Katherine, and spent significantly more than what should have been spent. That became public through government officials, who disclosed the then government paid nearly twice the price of what we should have paid to buy the power line. I do not know why. Nobody was able to explain why that government bought the Darwin to Katherine power line.
As a result, the infrastructure of Power and Water was deteriorating. Power and Water did not have the people and capacity to maintain infrastructure, and that culminated with explosions at the Casuarina substation. At that crucial moment, it was Labor which had to borrow money, upgrade facilities, the network and the generator capacity so Darwin and the suburbs could have uninterrupted power.
Yes, money was spent and borrowed. At the same time, it was the Labor government which started increases in power generation. I used to pay 15 per kWh. That went to 19, then 22 and in the last days of the Labor government it went up to 25 per kWh. If anybody here tells you Labor did not increase the tariffs, they are either lying intentionally or trying to pull the wool over your eyes. I challenge you to go back, if you can, to some old accounts and look at what you were paying in 2001, 2005 and 2012. Do not take my word for it. Look at your old bills and you will find Labor was the first government for a significant time to increase tariffs.
I have no problem with competition. During the Public Accounts Committee hearing, I said publicly that if you show me it will increase competition, make Power and Water more efficient and reduce prices, I will happily support it.
We have a government organisation which we are told is not efficient. At the same time you tell me the private sector is more efficient and can deliver a better service for a cheaper price. Have you tried to copy the practices and methods of the private sector to try to make a public organisation more efficient? The answer is no. Nobody has yet tried to do anything to improve the Power and Water situation.
In 2001, the CLP government changed Power and Water from a public service organisation to a government owned corporation. I recall that very well because I was the minister at the time we introduced the bill in the House. Why did we introduce it? We were trying to improve the efficiency of Power and Water. As far as back as 2001, there was a need to make it more financially transparent. Here we are 10 years later, and the CLP is using exactly the same excuse to move from corporatisation to splitting up Power and Water. It tells us this is not a progression towards privatisation; the problem is that every other state which has privatised its public utility followed exactly the same path, splitting a public corporation and making it easier to sell because you have power generation, transmission and retail.
Not many people like to buy transmission because it is capital intensive. You have to repair, replace or expand it every so many years. However, people are quite happy to buy generation capacity, bring new generation capacity and then try to sell power retail. It is most likely the state will keep transmission, and the network and everything else will go. It is funny why it was split like that. Even QEnergy could not understand why we would split Power and Water into three areas. It said if it was them it would only split it into two areas. The government tells us that by splitting it, it will be more efficient, yet the private sector is telling us that is wrong and it is better to split into two entities rather than three entities. Who do I believe?
I am told splitting an organisation into three pieces will make it more efficient. Where is your cost-benefit analysis? Treasury could not provide one, Power and Water could not provide one. If any private business wanted to do something like that, the first thing it would do is engage a consultant to see what it would be get out of it. A business would ask, ‘Will it be cost efficient for us? Will it make us any profit? Will it make things better?’
This is a public asset. You are proposing to split it. You have given us reasons why but you cannot give us a cost-benefit analysis. How can I believe you? ‘Trust me, I am a politician?’ I suggest you do not use that one, because a few tomatoes will come your way. People do not believe politicians when they say, ‘Trust me, I am a politician, have I got a deal for you’. Forget it.
Have you done a risk analysis? What will happen to remaining assets if the public sector comes in, cherry picks the best clients, and you are left with assets which do not make money or lose it? We asked the Chair of the board and he said, ‘No, no, we have not done that’. We asked Treasury and it said ‘No we have not done that’. How can I believe what you are saying to us stacks up?
The Territory is not Victoria or New South Wales. It is not an interconnected network with power generation facilities. We have two or three generation facilities in Darwin as well as a network; we have a power line from here to Katherine and a power generation facility in Katherine and that is it. The next one is a small generator in Tennant Creek, and there is one generator in Alice Springs. In Jabiru, ERA generates electricity, and, through the Power and Water network, provides it to consumers. In Gove it is Rio Tinto which generates electricity and distributes it to consumers.
We already have two private generators in the Territory, but neither has said they can do things better, take over the network and charge a cheaper price to consumers. No, they generate electricity, sell it to Power and Water and it networks it for them.
You then have all of the small places like Papunya, Beswick, Palumpa, and Port Keats. They have their own generators, which use diesel. If I pay 29 per kWh in Darwin, do you know how much it costs to generate electricity in Papunya? It is most likely about two or three times the price. We have Power and Water as a generator which produces electricity and guarantees everybody in the Territory will pay the same price. Why? Because not many people in Papunya could afford to pay 75, 50 or even 40 per kWh. What they pay is subsidised by everybody else.
If private enterprise comes to the Territory to increase competition – we have heard from QEnergy that the first thing it will do is go for the big consumers, those who consume a lot of electricity – it will take those big consumers and Power and Water will immediately lose a big chunk of its clientele, the ones which use a lot of energy and pay a lot of money.
How will it work now? Who will provide subsidies to people in remote communities? If the government will pay for it, where will it find the money? It must come from somewhere. The federal government will not always provide money, it must come from within the Territory. That means either our power prices will go up or what we pay for our services will. People in Papunya, Beswick or on the Tiwi Islands cannot be penalised, paying 50 per kWh for electricity. They must be at the same level, otherwise they will not stay there. They will go away, revolt and not vote for the government next time.
As the member for Araluen said, this is politics. It is politics 101; you do not penalise people who vote for you because they will not vote for you again. It is as simple as that.
The PAC met again today and spoke about the report and this is another aspect which concerns me. The government conceded the legislation could be investigated by the Public Accounts Committee. Why? There was a very good reason called the Blain by-election. The government did not want to go to parliament with legislation which people – everybody knows it is a precursor to privatisation. The government gave the legislation to the PAC for it to investigate, hoping it would win the Blain by-election by the time the committee had finished its work – yes, you won – before bringing the bills back to parliament.
However, you were not smart enough to play the politics right. There was a motion to debate the Public Accounts Committee’s findings before the legislation was debated. You did not want that; the job is done and you want the legislation passed. We now have legislation which will pass through parliament because you have the numbers, and tomorrow or another day there will be two reports from the Public Accounts Committee. One will support the government and the other will say, ‘No, we do not believe what you say is right and these are the reasons we do not believe it is right’. You have already made up your mind. You will pass the legislation even if we do not like it, and forget about the Public Accounts Committee. That is a good political game to get it out of the way so we do not have to worry about it.
The other thing that worries me is I do not believe the Treasurer when he says it is not about privatisation. You have brought legislation to split a government owned corporation into three; in other states that is exactly what happened before privatisation. Even if I wanted to believe you are doing it for other reasons, like increasing efficiency, keeping prices down and allowing competition, how can I believe you when only a few days ago your Chief Minister went to a COAG meeting in Canberra and signed up to privatise Territory assets?
Who has the numbers? Who is stronger? Is it the Chief Minister, who signed the agreement at the COAG meeting to privatise public assets in the Territory, or you, who has brought this legislation and said, ‘No, this is not about privatisation, it is only about making things more efficient’? I think the Chief Minister has the numbers and the power, and he will privatise it because that is the agenda of the Territory and federal governments. That was revealed very clearly when we asked Ken Clarke, the head of the Power and Water board, if any work such as a cost-benefit analysis had been done to find out if this is a good idea. He said, ‘Yes, we have done it’, but then turned to an official, who said they had not. Mr Clarke said, ‘No, we have not done any’, and I replied, ‘Hold on a minute, you are going to split up a corporation worth millions of dollars and you have not done an analysis?’ Mr Clarke said, ‘We could not do it because that was a policy decision of the government’.
It had nothing to do with efficiencies, transparency or anything you have been telling us. Mr Clarke told us the truth that it is an ideologically driven piece of legislation.
Member for Blain, you are new to this parliament, and you know we play politics; we talk about it, but this is an eye opener. I am talking as a member of the opposition, but I am also talking as a Territory citizen, a person who will receive, in the next three months, a blue bill to tell me I am paying so much, and in a year’s time when Power and Water is privatised, I will receive another blue bill which will probably show me a significant increase. I cannot do anything else because I am stuck with the Power and Water Corporation and private operators are, as stated, not interested in the small customers, only the big consumers.
This legislation, even if I thought it was good, has unfortunately been overtaken by events. It has been overtaken by the Chief Minister’s decision to sign a COAG agreement to say he will sell public assets. This time we are talking about splitting the Power and Water Corporation, and this is a precursor to sell it. What will it be tomorrow? Will it be TIO? Will it be the Darwin Port Corporation? These are public assets. They are not owned by David Tollner or Kon Vatskalis, they are owned by the people of the Northern Territory, wherever they live and whoever they are. It would be a courtesy to ask those people if they want their assets to be privatised and sold. This has not happened, but it should have before coming to us with this kind of legislation to prepare the ground for privatising Power and Water Corporation.
I do not support it because irrespective of what the purists and economists say, the work has not been done to satisfy me the reason the government has given is true.
Ms LEE (Arnhem): Mr Deputy Speaker, I bring to the parliament’s attention that the split of the Power and Water Corporation is a major policy decision which will greatly impact on the people of my electorate. Communities in my electorate are entitled to know about the full implications of the government’s decision to split the Power and Water Corporation.
There are serious implications which go beyond what the government has stated about its decision to split the Power and Water Corporation. Its impact upon remote communities, with regard to power, water and sewerage, will leave lasting negative financial impacts which will flow directly on to Northern Territory taxpayers.
Assurances given by the Treasurer are not clear, nor do they appear to be honest. I understand a thorough analysis of cost benefit and risk associated with policy changes is a basic requirement of any reform or good governance. It is my understanding the PAC has not been provided with a detailed cost analysis of this proposed reform.
Through Public Accounts Committee hearings, it has become clear the government’s Power and Water reform package is not supported by any evidence to show it would be a positive move on behalf of my constituents, nor would it be financially viable.
Three bills have been introduced to split the Power and Water Corporation. These are: the Power Generation Corporation Bill, which generates income; the Power Retail Corporation Bill, where competitiveness comes in; and the Power and Water Corporation Legislation Amendment Bill. Number three affects my constituents, has serious implications for people in the communities and is where off-grid issues come into play.
I heard the Treasurer say this will not affect anybody in the remote communities, but the legislation amendment bill will.
It is not clear whether this is the correct way to go. In fact, during the Public Accounts Committee hearing, concerns were raised about proper processes being followed in regard to these proposed changes. In other words, the cost-benefit analysis is seriously flawed. Remote parts of the Northern Territory, including my electorate of Arnhem and all other Indigenous communities, will be worse off than under current arrangements.
Off-grid sewerage systems out there are almost 100 years old, and there have not been any upgrades. What will Power and Water do to upgrade what is already in place? If you go to remote rural areas around Darwin, it costs $800 to clean up one septic tank. In a remote community, with many houses, how much will a cleanup cost?
In Barunga we have septic tanks. Trucks come twice a year to clean up, especially during the festival; there is a lot of rubbish to be taken out of the septic tanks. I have grown up with septic tanks overfilling every year during the Wet Season, and it is still a problem in remote communities. How will the government take care of this problem? It has been raised over and over again; you are well aware of the problem at Weemol and Bulman, and we continue to bring it to the floor of the House. I raised the problem when I was on that side of the House and I am now raising it again. It has been a concern of all governments, and no one has listened to people in the bush.
Funding shortfalls, we understand, are up to $6m. That is required to top up the current Power and Water Corporation budget deficit.
Off-grid power generation, water and sewerage services are a major concern to all. None of the key agencies involved in developing and implementing the government’s plan to split up the Power and Water Corporation have detailed a cost-benefit analysis on the government’s proposal, nor do they show any major benefits which will result from structural separation. If the government wants to go ahead with the structural separation of the Power and Water Corporation, it will need to convince the people of my electorate and the Northern Territory there is merit to it, as well as cost benefits, and that the impact on future electricity, water and sewerage services will not be financially detrimental. Thank you.
Mr McCARTHY (Barkly): Madam Speaker, I oppose this legislation which lacks an evidence base and research approach.
The case for splitting the Power and Water Corporation has not been made by the Treasurer or the Chief Minister. No cost-benefit analysis has been carried out, and there is a big agenda in preparing parts of the Power and Water Corporation for sale to the highest bidder.
The case for such a shake-up in our most important utility cannot be put with rhetoric. It is not good enough for the CLP to say this must happen because it thinks it is a good idea. The case for splitting Power and Water can only be made when eminent experts in the industry produce a transparent cost-benefit analysis which makes it clear the benefits outweigh the costs. Will electricity supply be more robust and reliable? We do not know.
Will the Power and Water Corporation run more efficiently? We do not know. Will average households be better off? We do not know. Will the cost of electricity rise or fall? We do not know. Will businesses be better off? We do not know. If we do not know the answers to these questions we cannot proceed with this legislation. It is interesting to note we are debating this legislation during the May sittings, when it could have been done and dusted in the March sittings. That shows an even further lack of accountability and transparency, evidence, research and, most importantly, a lack of consultation on behalf of the government. The only reason this fell off the Notice Paper in February was because the government lost its ability to govern. We are talking about major reform. There were some serious housekeeping matters, as well as serious challenges; there was one member of the government on leave, another had retired and left the seat of Blain vacant and three others deliberately walked in a major protest about the government’s agenda and its operations.
We saw this major reform, which was to be done and dusted in March, pushed out, and in the meantime the Blain by-election came on. I welcome the new member for Blain to this House. I stood at the Woodroffe booth all day campaigning for the Labor candidate and admired the very big and expensive billboards which had the new member for Blain announcing and promising there would be no sale and privatisation of Power and Water assets. That was an election promise he articulated loud and clear.
Welcome to the rough and tumble of the CLP, member for Blain, because the people in your electorate heard it loud and clear. They will now hold you to account, and this is being debated today. It is probably a very grassroots suggestion from another member of this House, but it is about reading the fine print.
Let us deconstruct a piece of this legislation, because, as my colleagues on this side of the House have outlined, the bill tells us privatisation is at the core of this issue. Clause 53, part 5A, says it in black and white:
- (1) Regulations may be made under this section for the purpose of effecting the transfer of all or part of the business of a Government owned corporation to a relevant entity.
A regulation can be made to sell parts of Power and Water to a corporation or company. Who has this power? The Treasurer does. What does the he say? ‘Trust me’. It is not good enough, when looking down the barrel of major reform to the Northern Territory’s ownership of public assets, to hear the rhetorical one liner, ‘Just trust me’.
Member for Blain, you will want to look into that wording in the act. You will want to talk to the Treasurer about this intent, and you will be accountable to the people who have very recently elected you.
An evidence-based approach: I ask the Treasurer, the shareholding minister, for some evidence, so I can tell constituents in the Barkly, who I represent, why the CLP is doing this.
I well remember the night the Treasurer provided this House with this small booklet, The National Electricity Market: A case study in successful microeconomic reform. It is an interesting document produced by KPMG. I looked through it, saw the argument of liberal economic rationalism and then tried to relate it to what the Treasurer was saying about a key reform agenda and connecting to the national network. There are some great graphics in here, and one of those represents the map of Australia with the big eastern seaboard states and South Australia.
We have Queensland, New South Wales, Victoria, Tasmania and South Australia, which represent big energy consumers. They are all linked and networked, and the Treasurer is definitely the big picture operator. He said, ‘We have to do this separation so we can be part of the big picture and connect to the east coast network. We can be part of this new way that has been moving for a couple of decades.’
I went back to the Barkly and told that story, but I did not have any evidence to continue the debate. In other words the first question which emerged was, ‘What does the CLP government want to do? Do they want to connect us with transmission lines to one of those big states? Is that the plan?’ We do not know. In debate, however, it came up; what about the reverse, connecting the Northern Territory to the east coast via grids or pipelines which will carry gas to support that hungry east coast market? The Treasurer did talk about that, and I have talked about that extensively in the electorate and across the wider parts of the Northern Territory. In terms of this debate and the priority of the Territory becoming a part of the national electricity market, there was no definition. There was no evidence and empirical research around how that would take place.
If you look at the track record of the CLP, the first major disaster was the gas to Gove issue where we knocked out some significant global explorers once the northeast Arnhem Land and Gove market was taken out of the picture. Once the decision was made to go down the route of not building a pipeline and not looking at a major customer in the northeast corridor of the Northern Territory, significant global explorers walked away and went back to places like Africa and offshore tenements, and started to look at investing there because the actions and rhetoric of the CLP government took that out with the stroke of a pen.
Transmission lines to connect us to this network and pipeline grids were merely rhetoric. There is no substance and no evidence. At the same time, constituents tell me, and I agree, that we are the Northern Territory and very different to the east coast players. We have massive geographic areas to cover, significant climatic and environmental challenges and a very small customer base.
The Treasurer provided this document to the House; I read a little more, and there were some interesting quotes, particularly from part 2.6.7 titled, ‘Open and adequate consultation across all stakeholder groups’. It describes how the National Grid Management Council and National Electricity Market operated over a couple of decades in its major reform in which it took its constituency with it to make sure it got it right. The National Grid Management Council consulted widely in determining the model for the National Electricity Market as it developed its code. The booklet says:
- The thing that characterised all of this was the degree of consultation and opportunity to have an impact on the outcome. The effort that went into a genuine conversation was important. There was serious consultation …
What I took from this document, in getting it right and taking an evidence-based approach – so the Treasurer is trying to convince us – was it was very important to get the consultation right. Have I seen that in the Northern Territory? No. Have I seen it from the CLP government? No. Are people in the wider Northern Territory, across the regional and remote areas, asking questions? Yes. Have they been provided with the answers? No. However, we are staring down the barrel of major legislative reform which will change the nature of public asset ownership in the Northern Territory – with significant ramifications for the future – with no evidence and no supporting research to convince us it is a good move. I cannot support the legislation on those terms.
Moving further into the booklet, on page 36 it mentions uncompetitive industry structures. It says:
- Other than Victoria, privatisation in other states led to uncompetitive industry structures. Ownership matters, but the reason for privatising should be for competition and efficiency, not for maximum sale proceeds. It follows that governments need to be very careful when privatising to avoid sacrificing competition benefits for sales proceeds. Anyone can sell a monopoly at a high price as monopolies are a licence to print money.
Once again, with no evidence and research, what is the agenda here? The CLP government and Treasurer are open for criticism from people across the Territory saying this is merely the sale of a cash cow, and, with that fine print in the legislation, a step towards privatisation through the disaggregation of the Power and Water Corporation.
The federal Liberal agenda has entered the arena with a promise of cash straight up for the sale of public assets. It seems to be fitting in with a national agenda; the Treasurer then came home from a meeting of his national counterparts, who patted him on the back saying, ‘You go for it’. I do not think any of them understand the Northern Territory. Did he ask, ‘Does anybody really understand operational conditions, the challenges in engineering and logistics?’ No, they just said it is a good idea because it is a Liberal agenda. I noticed the Treasurer mentioned a couple of Labor members in that crowd; once again I ask them to come to the Northern Territory, look at our specific conditions and then make their judgments.
This document provided by the Treasurer was quite interesting. There was interesting reading on page 46, with lessons to be learnt. It says:
- It also demonstrated there is an explicit trade-off between the benefits of a competitive industry structure and maximising sales proceeds from privatisation. The gains for the economy of a competitive industry structure need to take precedence over the fiscal impacts of privatisation. To do otherwise poses a risk to the benefits of the reform being sustained.
The sustainability of this major reform is another concern, the result of this legislation passing through the House today.
What will be the on-costs? What hidden costs will emerge? Members on this side, not only the Territory Labor opposition, but Independent members as well, are calling for that important research to take place to find evidence. Ironically, this would have already been done and dusted had the government not mismanaged its affairs so badly that it had members walk, leave and retire. It would have already gone through, but we now have a chance to once again mount the debate, stop the bus and say, ‘Let us go back to the drawing board and present the evidence clearly’.
The Treasurer, in an absence of any of that material, gave me the opportunity to start looking in other areas. I am sure he would be interested in the Electrical Trades Union report written by John Quiggin, which debunks the purported benefits of disaggregation and privatising electricity utilities. There is a fair bit of history in that debate going back to early privatisation agendas, the creation of the national electricity market and subsequent events. The key point from that evidence is privatisation has not necessarily delivered the benefits touted by its proponents, such as the Treasurer of the Northern Territory government. Privatisation in Australia and elsewhere has driven up tariffs, reduced reliability and cost jobs. There is a lot of material around that, but the Treasurer is in complete denial there is any privatisation. However, we see the fine print in the legislation to allow the next step down that road after the split of the Power and Water Corporation.
There is also the Treasury information paper, published in February, which you see is the blueprint for privatisation when you look into it. It is another focal point we can use in this debate and it goes back to where the member for Araluen started, with the Renewal Management Board and the 2012 mini-budget. When we are debating costs around the split, the Treasurer should take us back to those original costs. They were tagged the ‘$1m men’ because there was significant money allocated and spent. As the member for Araluen said, a significant amount of the agenda was devoted to the set play to score a try in the corner, split the Power and Water Corporation and open up the ability to privatise further down the track. The member for Araluen was quite clear that this agenda started in 2012, and I can remember that interim report being presented to this parliament.
I enjoy the AGM at Tennant Creek High School because the financial reports presented each year are far more sophisticated than what was presented to parliament by the CLP government regarding a significant spend of millions of dollars. I am not sure how many millions of dollars it was, but it was significant. We can start adding that to the total of what this venture will cost. My research, looking at other jurisdictions in the country, shows it to be around the $10m mark. The Treasurer has admitted a position of about $7.8m. Do we really know? No, we do not. It could be around $7 to $8m, it could be $10m or it might be more. We will then rack up costs already allocated to this exercise, going back as far as 2012 to the mini-budget and the Renewal Management Board.
The Treasury information paper also talks about efficiencies and keeping a lid on costs and prices. We saw a story of efficiencies when the Hudson Creek substation failed and caused the catastrophic blackout of tens of thousands of customers in the Top End. We saw that in comparison to the previous Labor government’s investment in the Power and Water Corporation, with new substations at Archer, Snell Street and Casuarina, significant investment in generation at Weddell and Owen Springs, added to investments around sewerage and water and the regions to address this.
We saw where that policy was heading, delivering those efficiencies. Under the Renewal Management Board we saw cuts to repairs and maintenance, staff, including significant corporate knowledge at the top of the tree, and those very concerning cuts to safety and training. What did it get for that policy? They got a mega blackout and found themselves scrambling to try to explain it to Territorians. When we talk about efficiencies we have a history there, and we must acknowledge that before we go any further with this debate.
On the subject of costs, the Chief Minister refuses to supply any forward estimates or actual costs around what this will be for the future. It is not only this time around in 2014, where we are floating between $7 to $10m, maybe more, adding in the Renewal Management Board and other significant costs. These are already major budget items, but we will also define some new costs spelled out in the Northern Territory electricity market reform information paper by the Department of Treasury and Finance.
It talks about competition as the ultimate arbiter, and ramping up competition. However, it says:
- The Government acknowledges the structural separation comes at a cost including:
- one-off legal costs of establishing the new corporations;
- one-off costs of developing formal contractual arrangements between separated upstream or downstream companies …
ongoing annual operating costs of additional company boards, which can only partly be addressed by limiting the number of directors appointed to such boards;
ongoing annual costs of additional executive management at the Chief Executive Officer and Chief Financial Officer level; and
ongoing annual costs of establishing separate corporate support functions and systems.
The Treasury paper says the government is conscious of these costs, but yet will not be honest with Territorians. It will not open it up for true debate, once again in a lack of evidence and transparency approach.
Representing constituents from regional and remote areas, there is significant concern about the disaggregation of the Power and Water Corporation. There is significant concern around the ability to privatise these separate entities once they are created, the costs and where it will leave us as consumers in regional and remote areas.
I looked for evidence around that debate. The Treasury paper has a dot point which says:
- Indigenous Essential Services (IES): which involves the provision of electricity, water and sewerage services in remote Territory communities on a not-for profit basis.
Therefore, before this legislation even passes and we see the split of the Power and Water Corporation, with the real revenue generating components being lined up for sale, we have a shortfall in Indigenous Essential Services for the bush.
The Treasurer says, ‘Don’t you worry about that. That is all okay. That money will continue to flow.’ Where will this be from, as the revenue raising components, the cash earners within the Power and Water Corporation, such as generation, start to be siphoned off? The Treasurer is undoubtedly an economic rationalist, the larger Liberal. He knows there will be companies coming across the border looking to get into this power market in Darwin and Palmerston, because that is where the big customer base is. ‘Do not worry, bush, you will be right. It will be okay’, as the Power and Water Corporation loses its revenue raising capacity. It is the organisation administrating Indigenous Essential Services; there is a logical way for it to go, and it is back to government asking for more money. In such tight fiscal times, decried by the CLP, where will this money come from? The Treasurer says, ‘Don’t you worry about that. Just trust me.’
I looked at some documents and there is a good one here; I wonder whether the Treasurer has seen it. He will probably see one in his own power bill; it is a document with some facts about Power and Water which came with my utilities bill. There is one part which relates to thousands of constituents who live in regional and remote areas. ‘Will things change in remote communities? The evidence, the research and the information says no, they will stay the same.’
That was all I got. I noticed the graph and the interpretation for consumers showing the Northern Territory’s position on the residential electricity tariff comparison. I noticed that New South Wales, South Australia, Tasmania and Victoria’s electricity prices are all higher, yet, Treasurer, you are telling me they went down the national electricity market pathway and reaped all the benefits of lower costs. They are all higher on the graph, and have millions of consumers. We have tens of thousands of consumers, but their graph is way above ours. All of those benefits and that good news is putting them way above the Northern Territory, and we are going down that same road.
I have real concerns about this; there has been little evidence. A paper about the National Electricity Rules was tabled in parliament on 20 March 2014. It is called The Committee on the Northern Territory’s Energy Future public hearing 20 March 2014 Power and Water Corporation Responses for Tabling, and it says:
- … they currently prevail in the national electricity market (i.e the wholesale electricity market in the rest of Australia with the exception of Western Australia). PWC considers that while the NER may be used to develop an overall template, the actual market rules should be tailored to the particular features and conditions of the NT market with input from its market participants. The Review does not provide a cost-benefit analysis of adopting the existing rules of either the NEM or WA’s …
Mr VATSKALIS: A point of order, Madam Speaker! Pursuant to Standing Order 77, I seek an extension of time for the member to finish his remarks.
Motion agreed to.
Mr McCARTHY: Thank you, Madam Speaker and member for Casuarina. I repeat:
- The Review does not provide a cost-benefit analysis of adopting the existing rules of either the NEM or WA’s WEM; and the consequent adjustments to suit the NT Generation market.
Treasurer, saying ‘Just trust me’ is not good enough. This is major economic reform. This lacks evidence and research, and has been pushed through, parliament. As I have said a number of times, it could already have been done and dusted – shock, horror! It is being debated again and it should be pulled. We should go back to the drawing board and make sure we get this right. It can be simply done with a cost-benefit analysis in tune with the Territory’s unique position.
As the Treasurer started this journey with me, providing the House with this document, this is about the big players on the east coast. This is about the future you desire for the Northern Territory, and this is about a future we can all share in. However, there are many major steps on the path. Is the Territory ready for this? Will our jurisdiction support the economic rationalism you desire?
We do not have the answers to those questions, yet you are asking this parliament to sign off on major legislative reform. I have put it quite simply; many members in this House are concerned. I have also had this conversation on behalf of a big constituency across a vast geographic area which is also very concerned when there are significant changes to the big end of town and no answers for them other than, ‘Trust me; it is all right, it will all stay the same.’ Many of those constituents are on fixed incomes; many are already reeling under the price hikes we have seen over the past 18 months, and many are very concerned about Northern Territory utilities assets becoming, essentially, private property in the future. Thank you.
Mr CONLAN (Central Australia): Madam Speaker, I support this and think the member for Barkly is right to say this should have been done a long time ago. You had 11 years to do it. If you showed the intestinal fortitude during your 11 years in government we may have had this ‘done and dusted’, to quote you.
Today I said to the Treasurer, ‘Can you provide me with a couple of points, a few facts and figures because I would like to contribute to this debate?’ I thanked him and his office, which provided me with not only talking points, but almost a speech. I might read it word for word because it articulates beautifully what the government is trying to do here.
Let us set the scene. The Power and Water Corporation is one of the last Australian government monopolies covering water, sewerage, generation, networks and retail. Other members may have used some of these points, so you may have heard this before, but they are worth reiterating in such an important debate. Until the early 1990s the traditional model for delivering electricity and water supply across Australia was through government-owned monopoly utility entities. However, in the mid-1990s, state governments began to undertake market reforms and restructure of their utility companies to encourage more reliable and efficient services.
These reforms included the structural separation of utility companies to their component businesses, introducing market competition and establishing independent economic regulation. In recognition of the need to coordinate this economic reform nationally, COAG agreed to national competition policy in 1995. From that time, eastern and southern states began to pursue the development of the National Electricity Market and nationally consistent water reform.
The Territory chose to remain outside the National Electricity Market at that time; however, we still commenced a reform program in 2000 which sought to meet our national competition policy commitments. Those reforms included the abolition of the statutory monopoly model for electricity supply; the removal of regulatory barriers to competition in the electricity generation and retail sectors; the introduction of retail competition; implementation of a third-party access regime for electricity networks; and the establishment of an independent regulator – the Utilities Commission – to regulate network prices, licence market participants and monitor conduct.
In 2001, reform of PWC’s corporate governance framework was introduced through corporatisation under the Government Owned Corporations Act and the Power and Water Authority became the Power and Water Corporation. The new framework provided for the adoption of a shareholder model for corporate governance, involving greater financial and operational autonomy from government and the establishment of a board of directors responsible for the strategic management of Power and Water and directly accountable to the Shareholding minister for financial performance. However, in order to maximise economies of scale and scope, Power and Water remained an integrated utilities entity.
Since 2001, various forms of administrative separation of the PWC’s businesses have been attempted to improve accountability, transparency and efficiency, including operational separation of component businesses, accounting and financial reporting by business lines, and the introduction of the ring-fencing code to ensure Power and Water did not discriminate between competing businesses and its own affiliates. Despite these measures, the PWC’s integrated legal structure has not always translated into clear benefits for Territory consumers.
The integrated structure of Power and Water dilutes incentives for it to operate as efficiently as possible. It does not result in transparent financial management, and serves only as a deterrent for competition in the electricity market. Fourteen years after the introduction of these market and regulatory agreements, the Territory remains the only jurisdiction in Australia where there is no competition in the electricity supply chain other than the small retail share gained by QEnergy.
The PWC’s financial position has always been deteriorating over this period, and in 2009, in response to concerns about financial sustainability, the Reeves review was commissioned. The subsequent report recommended significant increases in utilities tariffs to ensure the PWC could achieve financial sustainability. However, Power and Water continues to perform below industry benchmarks and remains heavily reliant on taxpayer funding and borrowings.
The current situation: as part of the 2012 mini-budget the government started a program to improve the efficiency of the PWC. Over the year following the mini-budget, the government also considered various options to assist the PWC achieve commercial sustainability and to address the Territory’s ability to attract competition into the electricity market. Together, these reforms are expected to achieve the overriding objective of providing safe, reliable and least cost electricity to Territorians.
As I mentioned earlier, Treasury’s main focus has been on the regulatory reform aspect of the program. Structural separation results in complete financial transparency from an owner/shareholder perspective, as it ensures greater exposure of the various lines of business to external reporting requirements and external financial audits. It also requires the formalisation of all contractual arrangements between separated lines of businesses, and it is this level of transparency and separation that the PWC has not been able to achieve to date. The separation of monopoly and contestable functions also allows the boards of each of the three GOCs to exert an increased degree of specialisation in their particular areas. This should lead to productivity and efficiency gains over time.
Given accounting separation has not been achieved by the PWC and legal separation alone would continue to see a single board faced with the conflicting objectives of monopoly and contestable operations, structural separation is considered the best option to achieve financial transparency and efficiencies with the Power and Water Corporation. It also increases prospects for competition in the Territory’s electricity, generation and retail markets.
A consequence of existing arrangements is that all Territory householders are bearing the cost of an inefficient utilities sector through the need for government to be the primary funder of utilities infrastructure and services in the Northern Territory, diverting resources away from core government responsibilities such as health and education. Further access to efficient utilities services is an essential input for industry; therefore, improving the efficiency of these services will support economic growth and development in the Northern Territory. Although the Northern Territory remains a small electricity market compared with other jurisdictions, technological improvements mean that economies of scale can no longer be a justification for retaining the Power and Water Corporation’s integrated structure.
In addition, a degree of investment uncertainty would continue for new competitors looking to establish in the Territory if the design of the structure of the Territory’s utilities sector was to remain different from other states. Therefore, regulatory and structural reform of the utilities sector is in the longer term economic interests of the Territory. This legislation creates two new government corporations, retail and generation. Networks, sewerage and water will stay with the old Power and Water Corporation. A wholesale electricity market is to be designed in concert with the national regulator and industry; the Northern Territory will move to the national regulatory system and fall under its rules and regulations, making it consistent nationally to do business in the Northern Territory. New generation has already been muted by several players, giving competition choice to larger consumers. APA has announced a study into joining the Northern Territory gas network to eastern networks, again leading to competition. Last week’s COAG meeting adopted the following motion:
- That the meeting acknowledges and supports the continued reform process being undertaken in the Northern Territory with the last remaining part of the National Energy Market puzzle after nearly two decades of reform.
The meeting further notes that the Power and Water Corporation is perhaps the last government monopoly which is to be reformed in line with the COAG reform process. In particular it recognises the efforts and the tenacity of the Minister, David Tollner, in the face of sustained resistance to change.
That is a great pat on the back for our minister. At the same time that the whole country was splitting up inefficient monopolies and trying to cut costs and debts, the Leader of the Opposition was on the federal Ministerial Council on Energy and did nothing to change these inefficiencies or adopt reforms she voted in favour of. I say again, yes, member for Barkly, this should have been done and dusted a long time ago. Not once has the Opposition Leader clearly stated why this simple reform process should not happen or offered one economic or rational reason why she opposes it.
The Opposition Leader then resorted to, as usual, thuggish personal attacks on the Managing Director of Power and Water Corporation, John Baskerville. Baskey is a legend of the Northern Territory and has been around for a long time. He has done a fantastic and professional job in managing change processes and personally handling the black-out in March. This is typical of people who are trying to cover up their mistakes, that is, the mistakes of the Opposition Leader.
The Northern Territory’s Utilities Commission has recently allowed a 42% increase in network charges, with the Treasurer himself strongly objecting as it would never have been allowed under the AER if the Northern Territory was in the national system. This increase would only affect large users, had the government still capped household prices.
Let us look at some of the debt. The PWC debt will reach $1.6bn in two years, which is $7000 per person in the Northern Territory. This will attract an interest bill of about $1400 a year per household, clearly more for large users. That is $1.6bn in two years, $7000 per person.
The government will not be selling assets and will continue to set the price of electricity. Some questions: does the Power and Water Corporation make a profit? The answer is no. Every household, remote community and business is subsidised by the Northern Territory government, through the taxpayer, via the PWC. All taxpayers funded subsidies are as follows:
community service obligations $61m
Total taxpayer-funded subsidies for 2012-13 were $155m, on the basis the PWC makes a loss of $114m. In fact, the $649 dollar subsidy per person is based on total taxpayer-funded subsidies.
That is one myth dispelled. Does Power and Water make a profit? No. Is PWC being sold off? No. The government is splitting the monopoly into three government owned corporations to provide transparency and increase efficiencies. The government will still own the corporations and they will not be sold. The Northern Territory will be joining the national market for rules and regulations, which has been happening in other states since 1991. The Northern Territory must have rules and regulations in line with the rest of Australia to support future growth, like we have with rail, roads, airports and our ports.
Will the price of electricity be handed over to someone else? No, the government will still set the price. Will the seniors discount change? No, it will stay the same. Will things change in remote communities? No, things will be exactly the same.
Let us look at repairs and maintenance. This tells a telling story; in 2009-10, repairs and maintenance cost $61m, in 2010-11 it was $56m and in 2011-12 costs were $72m. As it sits in 2012-13, repairs and maintenance costs for PWC sit at $80m.
We have painted a pretty clear picture why this is necessary. Member for Barkly, you are right, this should have been done and dusted a long time ago, but it has taken a Country Liberals government to bring this bill to parliament. I wholeheartedly support it.
Mr KURRUPUWU (Arafura): Madam Speaker, the Power and Water Corporation caters for all sectors of the Northern Territory in the provision of power generation, water and sewerage services. Three bills before the Northern Territory parliament propose to break up the Power and Water Corporation into three separate areas. These are: the Power Generation Corporation Bill; the Power Retail Corporation Bill; and the Power and Water Corporation Legislation Amendment Bill.
The cost of electricity in my electorate is already far too high. These changes will mean higher prices. Most of the people in my electorate use power cards; every time I move around my electorate people are complaining about the cost of electricity. These power cards are being used more today than they were a couple of years ago. The cards do not go far anymore and people need to buy more. People in my electorate know they have to pay more money for more power cards, but do not understand why.
I have tried to explain why costs are always going up. Most people believe the government is making it hard for them to run their homes. Everybody knows modern houses require electricity, water and sewerage services. Aboriginal people in my electorate need an explanation from the government about the continuing increases.
The government now wants to split the Power and Water Corporation. How will people in remote parts of the Northern Territory, including my electorate, feel about the proposed changes? Can the government guarantee the cost will not rise even higher than under current arrangements?
I have been told by many people, both here in Darwin and back home in my constituency, that the government will leave the bush even further behind in the cost of living because of this proposed change it wants to make to the Power and Water Corporation.
The government has not clearly explained what these changes will mean for the people of the Northern Territory. The government is moving too fast and needs to make it clear what the costs will be after it splits the Power and Water Corporation, and what will happen to families and businesses in our community.
Mr WESTRA van HOLTHE (Primary Industry and Fisheries): Madam Speaker, I support this important piece of legislation which will allow the separation of the retail and generation businesses from within the Power and Water Corporation.
As the Minister for Essential Services with responsibility for operational aspects of the Power and Water Corporation, I support this legislation to reform the Northern Territory’s utility industry for the benefit of all Territorians.
The current structure of the Power and Water Corporation is simply not delivering sufficient value for money for Territorians, despite the massive investment taxpayers have made and continue to make in this utility.
Simply put, the Power and Water Corporation will deliver better returns for all Territorians if the generation and retail aspects are run as stand-alone entities.
This legislation will allow the Power and Water Corporation to make major structural changes and bring this utility into line with other Australian utilities. The Power Generation Corporation Bill will establish the Power Generation Corporation, which will be responsible for broader electricity generation functions currently undertaken by the Power and Water Corporation. The new corporation will be responsible for operating all generation assets in the Darwin/Katherine interconnected system and regional centres.
The new Power Generation Corporation will sell electricity it generates to the Power Retail Corporation, third parties and private sector operators licenced to sell electricity in the Northern Territory.
It is important to note the Power Generation Corporation will not be responsible for the generation of electricity in Indigenous communities. It disheartens me a little to hear contributions from some of the members on the other side about what they consider concerns with the breakup of Power and Water, and how it might affect their remote communities.
I reiterate that the generation of electricity in these communities will continue to be undertaken by Indigenous Essential Services, a not-for-profit subsidiary of the Power and Water Corporation, so nothing will change there ...
Mr Higgins: Say it again.
Mr WESTRA van HOLTHE: Say it again? The generation of electricity in these communities will continue to be undertaken by Indigenous Essential Services, a not-for-profit subsidiary of the Power and Water Corporation. In those remote communities nothing will change.
Mr Tollner: I do not know how many times you have to say it, but I think you will have to keep saying it.
Mr WESTRA van HOLTHE: I pick up the interjection from the Treasurer. They say you must say something about 10 times before the message starts to get through. You must say things ad nauseum until you are sick of the sound of your own voice repeating the same message before you can have any confidence the message is starting to get through.
Anyway, I digress. The recent inaugural meeting of the COAG Energy Council adopted a motion acknowledging and supporting the continued reform process being undertaken in the Northern Territory. The COAG Energy Council also noted the separation of Power and Water was the:
- … last remaining part of the national energy market puzzle, after nearly two decades of reform.
It also said the Power and Water Corporation is:
- … perhaps the last government monopoly which is to be reformed in line with the COAG reform process.
This move has been roundly supported by the new COAG Energy Council. Both South Australia and the ACT have recently undertaken considerable reforms in their utility industries, which has resulted in greater consumer benefits and the lowering of state debt for utilities.
These reforms to the Power and Water Corporation are good news for Territorians who, as taxpayers, are owners of this utility. However, most importantly for Territorians who are consumers of their product, these reforms will see the better delivery of power services to all Territorians.
To be really frank, the Power and Water Corporation needs to cut its costs and debts to become more efficient. To do this we need to adopt these reforms and bring the Northern Territory utility into line with all other Australian states and territories which have enjoyed the considerable benefits of splitting the retail and generation components of utility companies.
These reforms are in the best interests of all Territorians for now and the future. Those on the other side do not get this, and all they are trying to do is make some political capital out of what has been a difficult decision. These are tough decisions, but that is why this government was elected. It was elected to make tough decisions for the benefit of all Territorians, and we will continue to do that.
Every other Australian state and territory has backed the Northern Territory government’s reform of PWC. I again congratulate our Treasurer for bringing in these changes, and I note the following motion adopted at the recent COAG Energy Council meeting in Brisbane:
- That the meeting acknowledges and supports the continued reform process being undertaken in the Northern Territory with the last remaining part of the National Energy Market puzzle after nearly two decades of reform.
The meeting further notes that the Power and Water Corporation is perhaps the last government monopoly which is to be reformed in line with the COAG reform process. In particular it recognises the efforts and tenacity of the Minister, David Tollner, in the face of sustained resistance to change.
Evidence before the Northern Territory’s Public Accounts Committee shows that reform of the Power and Water Corporation is necessary to restrict the spiralling debt, which will hit $1.6bn in two years’ time. These reforms started in other Australian jurisdictions as part of the COAG national agenda more than two decades ago. The Northern Territory is now just starting to catch up with the rest of Australia, not that I should be surprised.
After 11 years having to endure a completely risk averse Labor government in the Northern Territory, one which had no political courage and no political will to make tough decisions which would make Power and Water more effective, I am not surprised we are staring down the barrel of $1.6bn debt for Power and Water.
The member for Araluen gave a great speech in this parliament a short time ago on this Power and Water bill. She berated the former Labor government for its slackness, recalcitrance and inability to drive necessary reform for which we are now paying the price. I am pleased that after just 18 months in government we are here, having made some tough decisions, and moving on and getting the job done.
In separating the Power and Water Corporation, it will ultimately come under the national regulator, the Australian Energy Regulator, which looks at the entire electricity network and makes determinations based around a different set of rules. These reforms were adopted, as I said, by all Australian jurisdictions years ago, and we must change in order to move forward as a significant player in the emerging growth of northern Australia.
In line with other major infrastructure such as ports, rail, road and airports, the Northern Territory’s energy sector must also move towards the same rules and regulations as other states.
I support this legislation; the opposition is doing what it does best, whining and carping about this, and it has expressed a view of not supporting these changes. Given the lack of political will and courage which was the hallmark of Labor’s governance over 11 years, I am not surprised.
Mr GUNNER (Fannie Bay): Madam Speaker, I thank the member for Wanguri for the considerable body of work she has produced in looking at these bills. She has spent countless hours going through the detail, talking to stakeholders and developing the position of the Labor Party.
It is disappointing we are debating this today, before the parliament has heard back from the Public Accounts Committee about the work it has done on Power and Water. It made sense for that body of work to be brought back into the Chamber and put on the record. We could have heard contributions from committee members, as well as the evidence they found during the inquiry. We would have had that prior to the debate and passage of these bills.
It would have been a sensible way of handling this. We have six days of sittings with the budget next week, so we have the time and capacity for members to debate the PAC’s, I assume, majority dissenting report, and for the public to hear the debate and have access to members.
Unfortunately, that has not happened. We have the debate today on the three bills the Treasurer has brought forward, and this bill reminds us of the greatest broken promise in Territory history.
Mr Tollner: What?
Mr GUNNER: It is a tough title to win, Dave, but the CLP’s promise in August 2012 to cut the cost of living, which was followed less than three months later by a $2000 rise in the average family’s Power and Water bills, is the greatest broken promise in Territory history. It is not a good title to hold, and in debating these bills around Power and Water, the issue that most comes to mind for Territorians is the price they pay in their power bills every quarter. There is no evidence that what the Treasurer is doing will reduce the cost of power and water to Territorians, whether they are families or businesses.
During the PAC hearing we learnt there was no cost-benefit analysis done by the government on this bill or these decisions. These are massive decisions to structurally change Power and Water. That has to be a deliberate decision by government because we have a very professional public service; I have no doubt a public servant, at some stage, said, ‘A cost-benefit analysis on a decision like this will be crucial and a very important thing to do’. Someone has had to say they will not do a cost-benefit analysis and will push through.
That is the attitude we have seen from the Treasurer; he is a politician who likes to crash through. The government has taken a decision not to analyse the benefit of splitting Power and Water. The Treasurer has said that by splitting Power and Water, magically, there will be downward pressure on power costs. ‘It will just happen, trust me’, the Treasurer says, ‘I am not going to do a cost-benefit analysis. I do not want that work to be done; just trust me, prices will go down.’
The best argument I have heard against that is around fuel prices in the Territory. We are a small jurisdiction with not many companies. There is no downward pressure on fuel prices at the bowser in the Northern Territory. It is a problem government after government has struggled with, but the Treasurer says to trust him that power prices will magically go down, and there is no need for a cost-benefit analysis.
All we have seen from this government is prices going up. This is a direct breach of the promise it made to Territorians; I remember the CLP television advertisements where candidates lamented the arrival of a quarterly Power and Water bill. They said, ‘We do not know how we are going to pay for this’. After the CLP was elected, it put Power and Water prices up for the average family by $2000 a year. I am yet to hear how that makes it easier for people to pay their Power and Water bills.
The easily understood promise made by the CLP was that it would cut the cost of living. Instead it put up Power and Water bills. We are now talking about the split of Power and Water, and the Treasurer says, ‘Just trust me, it will go down’. He has a magic belief downward pressure will suddenly be applied and prices will go down when we know all the evidence, as seen elsewhere, shows it leads to rising costs.
The people who will pay the price for these bad decisions by the Territory government are ordinary punters and Territory businesses. Average families are paying more than $2000 a year extra for electricity under the CLP, and further price rises are inevitable while the government pursues an ideological agenda, rather than any sensible approach to Power and Water.
It is extraordinary the government deliberately chose not to analyse the benefit of this decision. This goes to the fact the CLP knows any cost-benefit analysis would show it is wrong and this magical decrease in power bills will not happen. It was a deliberate decision to push through these bills before hearing back from the Public Accounts Committee, in the absence of any cost-benefit analysis. All we heard from Malcolm Turnbull when he railed against the NBN was that you cannot make decisions like that without a cost-benefit analysis, yet we have the Treasurer saying, ‘Don’t worry, just trust me. It is going to be okay.’
Territorians do not trust you because you broke a very clear promise around cutting the cost of living. It is hard to say which is the greatest broken promise; there were some serious contenders, such as the promise to cut crime by 10%. Any public servant who lost their job after the CLP was elected would probably find the ‘your job is safe’ guarantee right up there as a bad broken promise.
The broken promise on Power and Water affected everybody. Every household and business was betrayed, in the Top End, Central Australia and remotely. Every Territorian is paying more for their power, water and sewerage under the CLP because of that broken promise.
The CLP knew everything before it was elected. All the books were on the table, it went through a full estimates process and still chose to make a promise to cut the cost of living. Three months later it did the exact opposite.
It was galling in many ways, especially in hindsight, to think how much the CLP railed, and still rails, against the carbon tax, which saw power and water prices go up by $135 per year, when it made the extraordinary decision to put up Power and Water prices by $2000 a year, 15 times more. Yet the CLP still rails against the carbon tax and tries to ignore the impact its decisions have had on ordinary Territorians.
No one buys the idea that decision by the CLP has not hurt Territory families. No one buys it that the carbon tax is a bigger impost on Territorians than the CLP decision to increase the cost of power and water in the Northern Territory. Not only did it increase the cost of living, it increased the cost of doing business in the Northern Territory. From its own figures, power and water increases cost the average small business $150 a week, or $7800 per year.
One of the biggest complaints businesses made was not just that prices went up, which they had to pass on to the consumer, but that no notice was given of the decision. They had no opportunity to prepare or do anything within their business model or set up to accommodate this decision to increase costs. This is all passed on to the consumer, so Territorians were paying more at home when the bill came in, and they were paying more when they went to shop at local Territory businesses, which makes things very difficult.
I know retail outlets were saying they had to pay extra for power and water at a time when they were worried about internet shopping. People were buying online from companies not being hit by the same impost as them. It put serious pressure on retail businesses at a time they did not need that pressure.
Let us look at the approach the CLP has taken to running Power and Water. It sacked the entire Power and Water board, the CEO and several other senior executives, including the general manager of power networks. It put in place a CEO who had not worked in the industry for over a decade. When things went wrong, like they did in March, the Treasurer blamed the workers. It was nothing the CLP had done, nothing to do with the cuts it had made to Power and Water and nothing to do with any of the decisions it had made around the running of Power and Water. Apparently, it was the workers.
The minister hung onto the blackout report until after the Blain by-election, which made political sense to the Treasurer but undermined what confidence remained in the government. When he released it he said it was the fault of union cronyism.
We know the Treasurer can be loose with the truth at times, and the media immediately said to him, ‘Where in the report does it say that? You are saying it is the fault of the unions, where does it say that?’ He had to admit he made it up. I think he said he had applied ‘creative licence’, which is essentially admitting he made it up. Disney has creative licence, JK Rowling has creative licence; the Treasurer of the Northern Territory should not have creative licence. People expect better of the Deputy Chief Minister and Treasurer. They should be able to rely on what he says, and it is extraordinary that when he finally released the blackout report after the Blain by-election he chose to blame the unions, although they are not mentioned in the report. It is clear you cannot trust the Treasurer, and he seems surprised Territorians do not trust him when it comes to these bills and the decision by this government to split up Power and Water.
People have already seen their bills go up and the agenda of this government to make Power and Water a profit-making entity. There is only one reason you want to make it a profit-making entity: to sell it. The Chief Minister did not rule asset sales in or out during Question Time this morning. They have seen the agenda of this government to constantly put up people’s power and water bills and make Power and Water a profit-making entity.
On this side we see Power and Water as an essential service; people have a right to power and water. They are basic services and you should be able to afford your power and water bills. You should charge the most you can – we are not a charity – but we are providing an essential service; people have a right to access power and water. The CLP see them as a luxury items and the Power and Water Corporation as a profit-making entity. If you cannot afford it, that is bad luck. That is the wrong approach to take to Power and Water, and it is why people do not trust this government when it comes to this decision. They do not trust the government on these bills the Treasurer has brought forward because they do not agree that Power and Water is not an essential service. It is an essential service, and people have a right to power and water at a price they can afford.
When making decisions around Power and Water, you must think about those who live in the Territory on the lowest wage, those who are poor, and you must make a decision based on what they can afford. We should not be pricing people out of the Northern Territory. They have a right to access power and water. Unfortunately and tragically, you are deliberately making decisions which have broken election promises to cut the cost of living, and instead you have increased the cost of power and water and are pricing people out of the Northern Territory. That is a tragic decision for a government to make.
You are a government for Territorians and more than a balance sheet. You must run a tight budget, but as a government you are about more than that. You have a responsibility and a duty of care to Territorians, and the decisions and actions you have made around the Power and Water Corporation show a dereliction of that duty. It is tragic that is the approach you have taken to Power and Water, that you would deliberately break an election promise to cut the cost of living and deliberately make decisions which hurt Territorians, yet you are surprised when people call you on it.
The member for Wanguri has done an amazing amount of work going through these bills in detail, why they do not work and the concerns we have with the decisions you are making. When you get to the principle of why we are opposing these bills, it goes to the heart of the fact we do not trust you and Territorians do not trust you.
You are making decisions to put up the cost of power and water with no evidence to show these decisions will do anything to reduce prices. The CLP will do anything to see Power and Water run more efficiently; you have talked about tripling the bureaucracy. You are not doing anything which will see Power and Water run efficiently or cost-effectively. You made the deliberate decision to not do a cost-benefit analysis on this policy decision. You are making decisions which actively hurt Territorians. It is extraordinary.
We know a cost-benefit analysis or a risk analysis on the split of Power and Water has not been undertaken. We know secret discussions have been held with private sector electricity interests behind closed doors, and the Leader of the Opposition talked about the evidence behind that today. We know the bills provide for the transfer or sale of Power and Water assets by regulation. The Treasurer says, ‘Trust me’, and he is asking for the authority to do this by regulation, so it would not even come back into this Chamber. The minister could make it happen.
We know the Chief Minister and Treasurer have backflipped on their commitment not to privatise Power and Water without a mandate from Territorians at a general election. This morning during Question Time the Chief Minister refused to rule asset sales in or out, and that includes TIO. These are big decisions which deserve the mandate of Territorians and should be taken to elections.
The CLP cannot be trusted with the Territory’s public assets. We do not support these bills and we are extremely concerned by the decisions the CLP is making around Power and Water. One of the things I find extremely concerning, going back to the report the Treasurer held on to until after the Blain by-election, is that he blamed the unions, even though they are not in that report. The fact he used creative licence concerns me, and the fact he made up the reason for the failure means we believe he is not serious about making sure it does not happen again.
When you choose political point scoring as a way of dealing with something like the blackout, it means you are not rolling up your sleeves and addressing the problems behind it. You table a report, you point fingers at the unions who are not mentioned in the report and are not doing the work. You are not serious about trying to fix the problems which led to the blackout in the first place. The CLP, in the split of Power and Water, is quite clear, especially with the decision to transfer power to the minister by regulation of our assets, that the agenda behind this is about the sale of the company. No one believes for one second it is about anything else. Splitting Power and Water into three divisions does not provide a single efficiency. We know the cost of the split is around $7m over the next two years, which is already triple the Treasurer’s guess at a recent press conference, and the cost of running three different entities and structures with three separate levels of overhead costs will continue to be more expensive.
You do not need to split Power and Water for competition and you do not need to split it to enter the National Energy Market. The electricity in this building has already been purchased from QEnergy; we heard the member for Port Darwin talk that up in his contribution to this debate. That is happening under the current regime. You do not need to pass this bill to allow competition in the Northern Territory; you can already be part of the National Energy Market.
I understand residential consumers and small businesses can only purchase from Power and Water, but you do not need the split to provide a new retail entrance. The barriers are economic, not structural. We are a small market, and splitting Power and Water will not make it any more viable for new entrants. The CLP has done nothing to justify the split; there are no independent reports, no cost-benefit analysis. We know from the experience of other states that the split and privatisation of electricity providers has only led to increased prices. The CLP has offered nothing to suggest the same will not happen again.
The CLP’s plans will increase prices, blackouts and job losses, because it is cutting the work Power and Water does. We are extremely concerned about the outcome of this bill, if it passes, which it will because the government has the numbers. We look again at the fundamental difference between how Labor and the CLP approach Power and Water.
We see it as an essential service and the CLP sees it as purely a profit-making entity. That is, essentially, why we oppose these bills, because they do nothing to allow Power and Water to continue as it should, providing utilities to people as an essential service. These bills are centred on the ideological belief Power and Water should be a profit-making entity, which will inevitably lead to its sale. This is something the Chief Minister will not rule in or out, and we cannot support these bills.
Mrs PRICE (Community Services): Madam Speaker, I support the three bills before the House. I do not do so lightly, as I am aware they are controversial and have brought disagreement from members of this House. These bills seek to allow Power and Water to compete in a competitive market place. Genuine competition breeds better prices; that is economics 101. I do not for one minute think this will happen overnight or even within the first 12 months. If we want to do it properly, we will need to build a solid foundation. These bills do that, providing a solid foundation for Power and Water to move on.
These bills strategically position Power and Water to create the right environment for competition in the Northern Territory power supply market. There has been some concern about the effect on Indigenous Essential Services, which is part of Power and Water. As the funding minister for IES through my Department of Community Services, the Treasurer assures me these changes will not have any impact on IES and its service delivery. The Public Accounts Committee has met and asked many questions, and we have heard the opposition ask questions about shortfalls in funds and privatisation. My Department of Community Services contracts IES to supply electricity, water and sewerage services to 72 remote Indigenous communities. IES is a not-for-profit subsidiary of the Power and Water Corporation, funded by an annual recurrent grant in the Northern Territory budget and by revenue raised from sales of services. The recurrent grant from 2013-14 was $71.3m, with expected revenue of $39m.
This is revenue from the sale of electricity, water and sewerage. The Department of Community Services funds the contract held with IES and the department. This is a three-year contract and was re-signed on 30 June 2013. The responsibility for the provision of IES is currently shared across three ministerial portfolios. With the new model for the structural separation of the Power and Water Corporation proposed by the Treasurer, there should be more centralised control over a business which delivers to the specific needs of remote communities. I suggest to the Treasurer that perhaps the responsibility for IES should only be with one minister.
Having IES stand as one of these separate entities will allow for a clearer and transparent cycle of revenue and expenditure. This leads me to address the usual scare tactics of the opposition and Independents; I ask why IES would be sold. Why would a private company want to take on board a business which is heavily subsidised by the Northern Territory government? The current IES model is that most customers pay for services through a prepayment method on power meters. Prepaid power cards are used on most public housing tenants’ meters. With revenue of around $40m in previous years, an expected $40m this financial year and a cost of $77m, why would this be attractive to a buyer?
It is my job as the only bush minister in the CLP government to oversee the future of remote communities.
Looking at proposed reforms from a strategic perspective, it removes red tape and better positions Power and Water to be competitive. It does not change how essential services are delivered in the bush, and will lead to a reduction in power prices. It is on this basis I support these bills.
Mr VOWLES (Johnston): Madam Speaker, I oppose this bill which is being rushed through the House without a skerrick of evidence from the government to show it is necessary, prudent or beneficial to Territorians.
I will concentrate my speech on two aspects of the legislation. Firstly, this bill has not had appropriate economic rigour applied to it. Secondly, this is nothing more than an ideological move by the CLP to prepare parts of Power and Water for sale. The Public Accounts Committee belled the cat last week on how irresponsible this legislation is.
Senior bureaucrats of NewCo and Treasury asked the obvious question as to whether the cost-benefit analysis has been done on the plan to split Power and Water. We all waited for the obvious reply, but it never came.
The answer should have been, ‘Yes, a cost-benefit analysis should be done on such a major shake-up of our most important utility’, but senior bureaucrat after senior bureaucrat confirmed our worst fears. The answer was no.
A cost-benefit analysis has not been done, by NewCo, Treasury or Power and Water. We have a ludicrous situation where our biggest and most vulnerable utility is being split up on a hunch it might be beneficial. This government has no idea whether or not it will be beneficial because the most basic body of work, a cost-benefit analysis, has not been done. Our members on the Public Accounts Committee could not believe their ears. How could it be possible that such an oversight occurred? I will venture some suggestions. Is it because this decision is being driven by CLP ideology, rather than sound economic judgement? Is it because this plan is being driven by the manic CLP desire to prepare the most profitable parts of Power and Water for sale? Is it because this government fears the answer a decent cost-benefit analysis might provide, that this whole exercise will cost tens of millions of dollars and benefit no one?
We know who will benefit. It will benefit whichever large corporation gets its hands on the most valuable and profitable parts of Power and Water. Territorians will be left with the unprofitable parts. There will be another cost; when parts of Power and Water are sold to the highest bidder, average Territorians will suffer. It is not me saying this; I quote the distinguished Professor of Economics of the University of Queensland, John Quiggin. He has undertaken the most comprehensive study of the history of power privatisation in Australia.
Professor Quiggin said:
- These policies have failed spectacularly. Prices have risen sharply particularly for households. Investment has been haphazard and investment failures have led to avoidable blackouts. Consumers have been barraged with competing offers from retailers, but have found all to be inferior to the reliable low-cost supply they formerly enjoyed.
Let me repeat, prices rise sharply and the outcome will be inferior to what we have today. We should be learning from failures in other Australian jurisdictions, not repeating them.
The Treasurer and Chief Minister will tell Territorians they have no plans to sell the profitable parts of Power and Water. Pull the other one, Treasurer, it plays jingle bells.
Proposed section 53 of the legislation shows how it will happen; the mere splitting of the Power and Water Corporation does not need proposed section 53 of this bill. If the Treasurer wants us to believe there is no privatisation agenda, he has a chance today to amend the legislation and remove proposed section 53, which I call the ‘privatisation clause’. Here is your chance, Treasurer. If there is no privatisation agenda, will you move to amend the legislation to get rid of the privatisation clause? There is only silence.
Of course you will not, because the plan is to split Power and Water into bite size chunks and flog the best bits to the big end of town. However, proposed section 53 is more than a privatisation clause, it is the Treasurer’s play thing. It allows privatisation at the stroke of the Treasurer’s pen without coming back into this Chamber with fresh legislation. That is right, if you get the numbers to ram this legislation through, big Dave Tollner can sell off the profitable parts of Power and Water without coming back to this Assembly for approval. It is scandalous.
We have consulted widely on the privatisation clause in this bill, the infamous proposed section 53, and I have heard the advice of an eminent senior counsel about it. In all of his years dealing with corporate law he had never seen anything like proposed section 53. It is bad legislation, and if it passes, it will be bad law. Allowing the Treasurer of the day to sell parts of the Power and Water Corporation by regulation rather than legislation sets a dangerous precedent. What will be next – TIO? During Question Time this morning the Chief Minister would not rule out selling TIO or the port. Treasurer, you should get rid of proposed section 53 today.
This is a sad day for the Territory. The CLP has proven, once again, it cannot be trusted. It cannot be trusted after it promised to lower the cost of living in the lead-up to the last election, and it cannot be trusted now. As sure as night follows day, parts of Power and Water will be sold if this legislation goes through. What will this mean for Territorians? The obvious one is rising power costs. The new member for Blain had his ‘not for sale’ and ‘no deal’ posters everywhere, and he would have heard, when doorknocking and meeting residents during the Blain campaign, that Power and Waters costs are hurting families. The cost of living has gone through the roof, Territorians are hurting, the people of Blain will be hurting, and they will hurt more if power prices go up. That is what we expect if this passes and the privatisation of parts of Power and Water go through, meaning higher prices for Territory families.
People are already leaving the Territory due to the high cost of living the CLP promised to cut. We have the highest inflation in the country at 3.6%, compared to the national average of 2.8%. The CLP went into the election in 2012 promising to lower the cost of living, and it is not doing that. The cost of living is going through the roof. If you privatise Power and Water and sell assets, power prices will go up, further hurting families. Families will have to decide whether they stay here or leave. What else will happen? Infrastructure investment will fall, more blackouts will occur, and the new owners of profitable parts of Power and Water will profit at the expense of Territorians. The Power and Water Corporation is too valuable an institution to Territorians to be ripped apart and disposed of to CLP mates. I strongly urge the Assembly to vote this legislation down.
Ms WALKER (Nhulunbuy): Madam Speaker, I also make it clear that the opposition does not support these bills and the split of Power and Water. We do not support changes to the Government Owned Corporations Act or the split up of publicly-owned assets, a thinly-veiled plan to sell off the assets of the Power and Water Corporation. As we know, amendments to the Government Owned Corporations Act will allow
this to occur.
I acknowledge the efforts of the member for Wanguri, as shadow minister for utilities, for her efforts throughout this saga since the CLP made its plans known. The member for Wanguri has challenged the CLP every step of the way, pursuing the matter through this parliament and the committee process. She has articulated the issues, exposed the smoke and mirrors of the CLP and stood up for Territorians who have not been consulted, not been told the truth and not been told what the cost of the split will be to them as taxpayers. They certainly have not been told what the benefits will be.
I also acknowledge the considerable efforts of the Opposition Leader in driving this debate, holding the CLP to account and exposing it for being less than honest with Territorians. She has exposed the CLP’s singular commitment to split and sell the Power and Water Corporation as nothing more than a cash grab, no doubt to meet all of its unfunded election promises in the bush.
Perhaps they have now given up on the bush. They seem to have lost interest in the bush, and the Chief Minister’s response to questions this morning from the Opposition Leader – he would not even rule out selling another government owned corporation, TIO. The agenda of this government is quite clear to everybody, and the CLP is taking Territorians for fools in telling us that splitting up and selling the Power and Water Corporation is a good thing. We are expected to suck it up, accept it and adopt a, ‘take it, we know what is best for you because we are the government’ attitude.
As a bush member I am particularly concerned about the implications of the split for my constituents. Those of us in the bush already have much reason to mistrust the CLP government because it has broken so many promises and back-flipped on so many commitments that any trust which might have been there has well and truly eroded. Like the rest of the Territory, people were told their jobs were safe, and far from reducing the cost of living, the CLP has driven it through the roof, much of it on the back of increasing Power and Water tariffs.
As the Opposition Leader said, average families are paying more than $2000 extra per year for electricity under the CLP. Further increases are inevitable when the government pursues its ideological agenda to split and sell Power and Water Corporation assets. These price hikes have hurt families, businesses and service providers, be they government or in the NGO sector, and have seen far too many Territorians struggle. People in the bush have been given second-rate service by this government, and none more so than those in our remote Indigenous communities, some of the most disadvantaged Territorians. On the matter of increased power tariffs, there was no formal or effective processing in place following the announcement in late 2012 that a 30% increase in tariffs would be in place from 1 January 2013.
As the Treasurer would be aware, many people in remote communities, and some of our urban communities in public and social housing, choose to pay their power bills using power tokens which come in denominations of $5, $10, $20 and $50. These slip into the household power meter to provide power.
The first people knew in January, those who are reliant on these power tokens, that power had gone up was when their lights went out, the fridges went off and the fans stopped turning because their power cards were not stretching over the number of days they were accustomed to. Consumption will vary, but I know constituents in my electorate at Yirrkala could expect to get a week out of a $20 power card. That is not being exorbitant with their consumption, far from it. It is not running air conditioning; it is running the basic household items and appliances, and doing so cautiously.
Where this power card for a family I am thinking of might have lasted a week, it now lasts three days if they are lucky, and possibly a bit less when it is very hot. Such was the increased demand for these power tokens come January last year that stores which sell them in our remote communities were running out. They too wondered why there was a rush on power cards, and it became a real issue for me at Yirrkala. I was contacted by a resident to ask if I knew the local store selling these cards had run out and there would be none on the way for a few days.
I contacted the store owner and found they had received no advice; the member for Katherine will dispute that, but he is wrong. He has been given wrong information; there were people who did not know the price of tariffs was going up, and therefore they should stock additional cards/tokens to look after people using them. Everybody relies upon electricity; we all need it, yet that advice had not gone out to residents and consumers of power, let alone stores selling those cards.
It was not just in my community; as I discovered, it was happening in many other remote communities. I phoned around to ALPA stores in northeast Arnhem Land. Yes, they had a similar demand on cards; they had put in extra orders and had run out. They knew residents in those communities had run out of power cards. The ALPA stores are good operators; they know how to look after their customers and are well run. The fact ALPA stores did not know they needed to stock up on additional cards is breathtaking.
Immediately after this saga, I also contacted GBMs, or GECs as they are now, and a number of them confirmed they had received no advance notice the power tariff increases were coming. It is not just power, but water and sewerage as well. This is the brochure, which I have waved around in parliament on a number of occasions, which went out to communities. I would dispute it with the member for Katherine, but it went out after the event for people who do not speak English as a first language. Your first look at this little brochure would tell you that perhaps there is a football carnival on down the road that weekend. In fact what it was about, if you are literate in English – it says, ‘Use less power and make your power card last longer’.
That is not the message people received when they picked it up. I understand that at one community in my electorate these were delayed because the printing had not been done. They had not been organised in time, and by the time they got there it was a little too late to be distributing them to people. I accept the intent in there that diagrammatically – perhaps this is helpful to people in trying to explain how they might reduce their power consumption. This should have gone out the day the announcement was made by the former Chief Minister that power prices were going up, not after the event when the horse had already bolted.
When this first occurred, at the hottest time of year, there were no fans, lights, washing machines – too bad if you needed to wash your kids’ clothes. There were no fridges, and with that, no food security. It is an appalling state of affairs, but that is the regard this government has for our remote Indigenous communities when it comes to the provision of an essential service, a necessity of life, and especially so in our tropical climate.
The next chapter in the sorry saga of the 30% increase to Power and Water Corporation tariffs saw Chief Minister Mills knifed in the back on 13 March last year. The new Chief Minister stepped up and declared the CLP, in his words, had been ‘hurting’ Territorians. He then promised to delay or spread out the pain of price hikes, which resulted in a rebate to consumers. It was a bit of a debacle to say the least. We know the Chief Minister even visited a Power and Water Corporation office, asking staff to tell him how he could work out his power bill and how the rebate or refund was working.
Here is an advertisement from the NT News on Tuesday 19 March which talks about revised power, water and sewerage tariffs. This did not appear in the weekly newspaper which comes out in my electorate; I do not know about Tennant Creek. There is nothing in there about how, if you are reliant on power tokens, your rebate would be calculated, given tokens were put in, meters were recalibrated and obviously not lasting as long.
I raised this with the utilities minister, the member for Katherine. It was a most unsatisfactory situation; what they decided to do in this debacle was credit $50 back on to the power meter of every household which had one. It did not matter whether you had a four-bedroom house which might have been home to 20 people, or a two-bedroom unit which may have had only a couple. Everybody received a $50 refund, irrespective of the size of the accommodation or how many people living there.
The government takes Indigenous people in remote communities for granted. They are out of sight and out of mind. They will not complain, they do not speak English and they do not necessarily listen to the ABC or receive the NT News. It is only when the likes of us go travelling around communities and talk with our constituents that we discover how hard done by they are.
Apart from the impost on residents with these hikes, residents and service providers have also been hit very hard in trying to meet operational costs with such massive increases. As the shadow minister for Local Government, I know there was an outcry from the local government sector. There continues to be an outcry in urban and remote areas about how much these costs have hurt.
The member for Namatjira knows only too well the MacDonnell shire looks after three swimming pools and communities in her electorate. This was a time of year when it was starting to get very hot down there in desert country, and these pools could not operate because they could not afford the power.
It took some time before it was resolved. With the change of government, the new Indigenous Affairs Minister, Senator Scullion, given he had campaigned in the bush and told people he would look after them, had no choice but to find the money for these pools to operate.
As recently as the last sittings the announcement was made that most municipal and bush local government councils would be responsible for maintaining Power and Water Corporation assets like street lighting. There was a huge outcry about that. There was a media release by mayor Abbott of Palmerston city council, quite rightly complaining long and loud about the imposition that would be on Palmerston city council, well over $500 000 to take on the maintenance of those assets. That translates to $52 on their annual rates, amounting to a 5% increase based on current figures. That might not sound like a great deal to some people, but it is.
City of Palmerston Mayor Ian Abbott, outraged at news of the new charge, said:
- Given the current failings of Power and Water and talk of a sell off, it’s hard to see this as anything more than fattening the pig before they take her to market …
This came around the time of the massive blackout. It is not just us, Treasurer, who are talking about your plan to split Power and Water, with a view to selling it. As the mayor said in his media release:
- This is a kick in the guts to struggling families in Palmerston …
To go back to matters in the bush, it is not just me or the opposition which see the betrayal in the bush. People in the bush see it, but as of today, three MLAs who walked out on the CLP have taken up seats around me on this side of the House, because of their considerable list of claims around the CLP’s failure to deliver in the bush, and they have spoken out against these bills today. I am very pleased to see these members speaking up on behalf of their constituents.
The Treasurer has brushed away the issue of arrangements under community service obligations – CSOs. He was asked by the member for Wanguri in Question Time this morning where the additional $5m to $6m will come from annually. We all want to know where the even bigger sums will come from to meet the cost of repairs, maintenance and upgrades. When SIHIP was under way on Elcho Island at Galiwinku, 70 or so houses were built a few years ago. I cannot remember the figures with some accuracy, but one half of the cost of delivering SIHIP at Galiwinku was associated with the upgrade of Power and Water infrastructure. These communities have been there a long time, with ageing assets and infrastructure, and they continue to grow. People are having children and want to remain on country; they need more houses. We build them more houses and you must, in turn, upgrade utilities infrastructure in remote communities.
Where is the CLP planning for this sort of infrastructure? What negotiations is it holding with its federal counterparts about how, into the future, it can look after assets and improve those associated with utilities across our remote communities?
I note the Treasurer’s reference to alternative energy, the cost of diesel, not to mention, whilst they are climate change deniers, the pollution which comes with burning diesel. That is why, under the former federal and Territory Labor governments, there was significant investment in solar energy and bush lights. All around my electorate I see bush lights technology on homelands. Most recently, the community of Rorruwuy installed bush lights. It works incredibly effectively for those communities. A number of the Laynhapuy and Marthakal homelands have them, and I understand that right at the top of Elcho Island, a beautiful little homeland called Gawa is next on the list to receive solar energy to power up the community. They welcome it, I welcome it, and if this is the path the Treasurer is going down then all power to him.
Power, water and sewerage services are essential. They are critical, especially in remote communities where people who live there are amongst our most disadvantaged Territorians. They already have a higher cost of living than Darwin by virtue of living remotely where everything has to be shipped, flown or barged out. We know the price of a basket of groceries in a remote community is significantly higher; these are not luxury items, they are basic food items.
Speaking of the Stuart Highway, the member for Stuart is now, as she pointed out, just one of two bush members in CLP ranks and the only bush member in Cabinet. She talked about her role as Community Services minister. Is she satisfied that constituents in her electorate are happy with the way things are going under Power and Water?
I listened to her talk about Indigenous Essential Services, and she said there would be no impact. She said that under these three bills and the arrangement to split the Power and Water Corporation there would be no impact on IES. She talked about how sensible these bills are; she said it is economics 101. Member for Stuart, I do not concur with you about economics 101. How can you say that when we know there have been no costings produced around this, no plans revealed about what cost benefits will be and what it will cost to split up these three entities of the Power and Water Corporation? However, I got a sense you were putting your side on notice when you said you were supporting this bill on the strength there would be no impact on IES. I hope you are right, member for Stuart, but you have given yourself an out for when the day comes and you discover it is not all rosy with the split, and people in remote communities are indeed affected.
It is extraordinary we are debating these bills without thorough and rigorous consultation with Territorians and without any analysis of what this will cost, which inefficiencies it will address and what benefits it will bring. We know the government was dragged screaming to a very brief public hearing and inquiry into plans to split the Power and Water Corporation. That hearing was held last week, where we know – because we saw and heard them – witnesses confirmed during questioning that a cost-benefit analysis had not been undertaken. That is frightening for people, with such a significant reform the CLP is trying to put in place.
There are many facets to this debate. On May Day I very proudly marched with members of the ETU for a few reasons, one of them being that it was in memory of a very dear friend of mine who was a staunch member of that union. Good Friday was the first anniversary of his passing. He worked tirelessly for years to uphold and fight for the rights of workers to ensure a safe workplace and conditions of employment and, as a sparky, he was keen to work with employers to help them understand power generation, and that it is an essential service, not a luxury.
He knew only too well, living in the Northern Territory for so many years, that with a low population base, a huge geographic area and areas of disadvantage, making money out of Power and Water, an essential service, is just about impossible. It is a service, not a business.
I talk about the May Day march and the ETU because it reminds me about the jobs of those in the Power and Water Corporation in the event of this split and a sale. What about these hard-working public servants, whether they be in an administrative or trades capacity, and the apprentices they take on?
What consultation has there been with people who work there? Has there been any consultation about these proposed changes and how they might impact on their working lives and, in turn, their families? No, of course there has not from this government we know. This is from a government which, prior to the 2012 election, said, ‘Your job is safe’, something enshrined in this widely circulated selfie by the member for Port Darwin, who is and has been the Minister for Public Employment since the election. He was the first to wield the axe on hundreds of public service jobs, having gone to an election saying, ‘Your jobs are safe’.
Seeing this photo in my office – I keep this one close by to remind me of why I am here, what I am working for when I return to Darwin for these sittings – reminded me of another photo. It is this one, handsome fellow that you are, member for Blain. It is the member for Blain in a poster like this for the Blain by-election, under the banner ‘Power Water Corporation – No Sale’.
Welcome to you on your first day in the House, member for Blain. Welcome to the world of dirty politics, sitting as you are, member for Blain, in the CLP government. I hope you do not live to regret that photograph.
I know you are a good person with good intentions; I enjoyed your maiden speech this morning with those words around honesty, integrity and humility. I genuinely believe you possess them and you have come into this House to do good things for the people of the Northern Territory and your electorate. However, I will keep that photograph close by. If I am disappointed or not disappointed, if I find out it is not for sale, will that not be a wonderful thing? I will be keeping this very close by – along with the wonderful photograph of the member for Port Darwin – to remind myself of the promises the CLP make to people and those promises it backflips on.
We will be watching this debate very closely. We might be in for a late night tonight, but I reiterate, we, on this side of the House, representing so many disgruntled Territorians, do not support this bill.
Ms ANDERSON (Namatjira): Madam Speaker, I will ask questions of the Treasurer and shareholding minister to outline, through the committee stage, some of the issues raised. These have been raised by the Labor side as well as my colleagues, the members for Arnhem and Arafura. The problem we have with the separation is that at the PAC stage, it was not given enough time; there was only one meeting. How can there have been investigations into what is good and what is bad, based on one meeting?
The Country Liberal Party came out very early in its election campaign to say it would be a government of transparency and honesty for Territorians. It was about telling Territorians the truth, and as bush members we have concerns. Hansard shows a $6m shortfall. Those are some of the questions we need answered during the committee stage. We need to go back to our constituents and let them and other Territorians know what is really happening. You know the cost of living in the remote bush and that people struggle. As the member for Nhulunbuy said, power tickets are costing more. It is costing more for people to put the cards in; instead of getting a $50 card to last four days, it is now lasting two.
There are more and more people making fires on the verandah. They are cooking outside because they cannot afford the $20 or $50 tickets anymore. Once upon a time you could buy a $10 or $15 ticket and that would give you enough electricity to run your house overnight. People are really struggling. In remote Aboriginal communities there is overcrowding. You have up to 27 people living in a house.
Those are some of the questions we need answered. Why, Deputy Chief Minister, was there only one inquiry, instead of allowing the PAC to investigate further on behalf of Territorians to see what benefits they would have as a result of the breakup, and so there is honesty and transparency in what the government is doing? It is not just the remote bush; it is ordinary Territorians in your electorates as well, in the northern suburbs of Darwin, who are finding it very hard with the cost of living. Food prices are really high now, as well as electricity bills; we need to make sure the doubt in these people’s minds is answered. People are talking to us to ask these questions.
It is in the best interest of governing for the future that some of these questions be answered. It is hard to support the government if at the PAC stage it could not even allow an inquiry to go through its proper process of investigation to see whether the split will be good for Territorians.
What is the impact on remote Aboriginal communities? Why, at the PAC stage, was the $6m mentioned? There is a shortfall of $6m, Treasurer, and those are the questions people want answered. They are not just my constituents, but yours in the northern suburbs as well. If we are talking about honesty and transparency, and moving the government forward, those are some of the questions you need to answer. When you look through these bills and see regulations to allow your signature to change anything, it puts a doubt in people’s minds and they think there is a different aspect to this legislation. The fact that you will have the right, even after the committee stage tonight and the passing of these bills, to change things at your whim is frightening.
We will be listening to the debate between you, the opposition and the Independent member at committee stage because we want to hear these questions answered. Yes, the bush is struggling. Remote Aboriginal communities are struggling with the price hikes and power ticket prices are getting higher.
We need to make sure we look after all Territorians when we look at social and economic opportunities. We are all Territorians, and it is about moving forward. Indigenous people own more than 50% of the Territory’s land mass; we can call another 48% under native title, which is pastoral land. That makes us key players and stakeholders in the Territory. We want to be heard, seen and consulted fairly and justly in the future direction of the Northern Territory and what is happening here.
Northern development mostly happens on Aboriginal and pastoral land. That is why we feel, as Indigenous people, that our land council should be supported. Our land councils should be key stakeholders in any kind of opportunities you have with building the north or economic opportunities in the remote bush. It is our job, as members of parliament, to ask questions on behalf of our constituents and Territorians to make sure we highlight the failures of government to them.
I would appreciate, Deputy Chief Minister, if you could answer some of these questions during the committee stage. We can take your answers back to our constituents and tell them what you have said about there being no impact on power charges in the remote bush and that prices will not go up, so people do not have to be frightened about what is coming, because they can see it.
We need to be open and transparent. We have always said that when we come into parliament it is about openness and transparency. It is about being honest with Territorians and making sure we take all Territorians forward in any kind of policy development and rules we make.
Through our debates we can engage and identify if there are misconceptions in the things we say to you. I would like you to highlight the things we are talking about and the questions we are asking so it gives us the chance, as local members, to go back out bush and tell our constituents.
Mr TOLLNER (Treasurer): Madam Speaker, I thank everybody who has spoken on this bill tonight; I have enjoyed listening to the comments made. It is fair to say there are a number of people in this Chamber who are quite ignorant of what has been going on in Australia in the last two decades in relation to changes to our utilities.
A few weeks ago I circulated this booklet to members of parliament to give them an understanding of what is going on. For those people who cannot see, it is the National Electricity Market: a case study in successful microeconomic reform, which is put together by the AEMC and KPMG. It is a fantastic assessment of how National Electricity Market reforms have been undertaken in this country.
I have heard a range of arguments this afternoon, the biggest one probably being to do with the cost-benefit analysis. If anyone had looked at this booklet, they would notice it is a cost-benefit analysis. This has now been occurring for almost 20 years in Australia. Whilst we might lament the Northern Territory as the last jurisdiction and that we come in way too late, we now have evidence from all states and territories around Australia as to how this microeconomic reform needs to take place.
We have case studies and all the analysis. This has been a big issue across the country, and we have some good people involved in putting these reforms together. I have full confidence in the people who have been working diligently behind the scenes to make sure the Northern Territory gets it right.
A couple of weeks ago I had a telephone conversation with Shane Stone, the former Chief Minister of the Northern Territory. These days he is, apart from having range of other duties, a board member and I think Chair of Energex in Queensland. Mr Stone said, ‘Look, Dave, I take my hat off to you for what you are doing in the Northern Territory. It is a tough call, but it certainly needs to be done. This is one of the most complex industries I have ever been involved in.’ He said his position at Energex has opened his eyes to the utilities sector. He then made a very interesting comment, saying, ‘If I had my time as Chief Minister again, knowing what I know now, I would certainly be heading down the same path you are heading down’. He told me it is far too late to be doing this in the Northern Territory now and that it should have happened years ago. He also said, ‘If I had paid more attention I would have done more to introduce competition into the electricity market in the Northern Territory, but at the time Power and Water was out of sight, out of mind’. It was not one of the top of mind issues of the day and, consequently, when he was Chief Minister, the government did not really pay attention to it.
That is an excuse as to why a number of governments did not do anything at all. However, in the early 2000s the Northern Territory government received a $60m lesson in why these market reforms are necessary. At the time we saw the Power and Water Corporation, ably assisted by the government, freeze out NT Power and not let it generate and connect into our grid. NT Power successfully sued the Northern Territory government for in excess of $60m for not allowing it to compete in the Territory marketplace. One would have assumed at that stage the then Labor government would have snapped into reality and said, ‘We are bound to do this, we should get on board and do it’.
It did not happen; we had our current Opposition Leader, as the Treasurer and Shareholding minister of the Power and Water Corporation, and that is when things went pear shaped. At least Syd Stirling kept an eye on the Power and Water Corporation, but as soon as the member for Karama took on the job as shareholding minister things started to spiral downwards in a big way very quickly. We saw debt within the corporation go from about $200m around 2009 to about $1.1bn when we took over government. There were more than 200 employees put on and no change in service at all. It was interesting to see the investigation the Utilities Commission undertook after the most recent system black in March. For that investigation the Utilities Commission employed the Australian Electricity Market Operator and a large international consulting firm called Evans and Peck, and the alarming things which turned up in their report belled the cat about the way the former Treasurer handled the Power and Water Corporation. They noted that following the investigation into the previous system black in 2010, no recommendations were implemented.
It is hilarious when the opposition and the ETU say, ‘Oh, no, that is all your fault because you sacked the board and the managing director in 2013’. That was three years after the investigation and report, nothing had been implemented, but it was mine and John Baskerville’s fault these things had not been done. Poor old Baskey, only getting to warm the chair, had a catastrophic system black and all of a sudden it is his fault.
It is nothing to do with the fact hundreds of millions have been created in debt, hundreds of millions in taxpayer subsidies have been poured in, hundreds of new employees have been added, but no recommendations were implemented. It is alarming; what is even more alarming is the way the Opposition Leader treats people like John Baskerville. I am looking at a transcript of an interview with the Opposition Leader by Pete Davies on 17 April. What the Opposition Leader had to say was a slur on John Baskerville. She went on about him not being up to the job, saying he knows nothing about Power and Water and that he is a sort of middle manager. It is alarming the way the Opposition Leader would talk about somebody who is aware of some serious problems within the organisation he fronts.
Someone gave me an analogy the other day. You take your car to a mechanic to have the brakes fixed. You pick the car up after having the brakes fixed, drive it away and have an accident because, lo and behold, there are no brakes. There is an investigation to look into why the car did not stop, and the next mechanic you go to says you had a crash because your brakes were not fixed. Who do you blame? Do you blame the guy who told you your brakes were not fixed or the bloke who was supposed to fix the brakes in the first place?
Typical of Labor, it does not care who it demeans in its quest to muddy the waters and strike fear into people’s hearts, but it blames Mr Baskerville. After 11 years in government and complete control of the Power and Water Corporation, it is now somehow Mr Baskerville’s fault this system black occurred. It is appalling. I have listened to this debate and the Opposition Leader target the former Under Treasurer and Utilities Commissioner, Alan Tregilgas, one of the most respected men in the industry in Australia, saying he somehow lied to her. She said she took notes and he said something which was not how she recorded it, therefore he is a liar. It is appalling the Opposition Leader would stoop to such tactics and muckraking of the worst kind, but that is her poisonous nature. She does not care who she hurts along the way in her quest to scare the daylights out of Territorians. It has been an interesting debate in which I have heard a number of things. The member for Casuarina said he is scared competitors will come in; I think he used the words ‘cherry pick’ customers, the big business customers on cost reflective prices.
Prior to coming into parliament I spent a bit of time in sales. I sold all sorts of things and there was an old adage in the sales industry: ‘it is a lot easier to retain a customer than it is to steal a customer from somebody else’. The idea was you looked after your current customer base, they would be kept happy and if you took your eye from them they would be easy to steal. Those tranche one, big customers are all on cost reflective pricing. Is it not the whole idea of competition to try to achieve lower costs? If a generation company turns up here and can offer a better deal than the Power and Water generation business, a business will not naturally go to the new generator. That is the whole idea of competition. If the Power and Water Corporation or the new generation business wants to retain those customers, they may have to sharpen their pencils and find a cheaper way of delivering better electricity services to those big customers. That is exactly the aim of this legislation, to encourage competition.
I heard the member for Nelson say no one has pointed out where there are any inefficiencies in the system. I ask him to look at the Utilities Commission report into the network price determination, because in the network price determination the Utilities Commission reveals the network is 27% less efficient than a comparable network somewhere else. If the network is running inefficiently, who is to say the generation, retail or water and sewerage businesses are not running inefficiently? At the moment it is all one company and what is inefficient in networks will be inefficient in generation and retail. It will be inefficient across the board, and that is what we are trying to rectify by introducing competition.
A range of other things have come up again, with the Independents from remote areas concerned about Indigenous Essential Services. I reassure them again that these changes will have nothing to do with Indigenous Essential Services, and it will not change things there. I do understand the member for Nhulunbuy’s concerns about power supplies in remote communities, and she has said it is not good enough when somebody’s power goes out or the price goes up. I remind the member for Nhulunbuy that taxpayers are subsidising those bush households to the tune of around $8500 a year. It is hardly the action of an uncaring government. This is a government which believes in the uniform tariff. People living in remote communities should not be penalised for living in remote communities, and we are prepared to subsidise their tariffs. To suggest $8500 a year per household is not good enough, I would like to hear from the member for Nhulunbuy as to what figure she thinks we should be subsidising bush households to. That would be an interesting scenario.
The member for Wanguri needs to understand that prices are fixed. They are set and regulated by government. They will not change after these changes. What may change, if there are extra costs in the system, is the subsidy provided to the corporation.
I find it ludicrous that Labor is concerned about subsidies and what we spend on them. This is the same organisation which saw the Northern Territory heading towards a $5.5bn debt, with a budget deficit of over $1bn this year, allowed Power and Water to borrow another $900m, with another $500m in borrowings yet to come and which saw the organisation put on an extra 200 employees with no change in service. Labor is now saying it is concerned about taxpayer subsidies which might have to prop up these new organisations. That will not be the case.
These organisations, whilst they may initially cost some money to set up, which is only fair to see them established – the whole idea about structural separation is to allow market competition to see efficiencies in the system, as well as accountability and transparency of where taxpayers money goes; it is currently very difficult to do that with the Power and Water Corporation. There is no accounting separation within the relative services it provides. We are trying to make the system much more transparent, accountable and efficient. Ultimately, Territorians are the ones who pay, one way or the other.
We must reduce the amount of subsidies going into an organisation which could be much more efficient, because they should be going into other areas. Things like roads, schools and hospitals could use a lot of that money. If we can make the Power and Water Corporation and others in the sector much more efficient we would free up money for government to spend in other critical areas such as health, education and roads.
Mr Wood: That is the argument for privatisation.
Mr TOLLNER: There has been a couple of interesting arguments. I heard the member for Barkly say monopolies are worth more money and people will pay a hell of a lot more for a monopoly. That is probably true. If we were to privatise it, why would we not sell the whole thing as a monopoly rather than splitting it up?
Privatisation is an interesting red herring being thrown around everywhere. I will mention an organisation called Australia Post, which has existed since the 1970s. Prior to Australia Post it was called the Postmaster-General. The PMG was responsible for all postage, plus telecommunications. Sometime in the 1970s the federal government decided to structurally separate the PMG, creating Australia Post and, at the time, Telecom. Telecom was later corporatised and became Telstra, and was then sold. Now in Australia we have a situation with several thousand competitors in the telecommunications market, but back in the day of the PMG there was only one, and it was the PMG. No company would get into that. It was government which had to pave the way and create many of the networks around Australia before competitors started to join the marketplace, but that has happened.
There was the eventual sale of Telstra, which we all know happened under the Keating government and was carried on by Howard and others. Telstra is now a fully privatised company, but on the other side of the coin, Australia Post, is still, to my knowledge, 100% government. Admittedly there are small franchises where people buy the right to sell stamps and provide other Australia Post services, but it is still 100% Australian government owned. That was some 40-odd years ago and we have still not seen the privatisation of Australia Post. However, it is a much different organisation to 40 years ago.
My point is that structurally separating something does not necessarily mean you will go down the path of privatisation. I understand it is easy to raise concerns that people have about privatisation. I was sitting in a Treasurers’ meeting a couple of weeks ago with Joe Hockey, where he informed us of the federal government’s plan to provide incentives for states wanting to privatise. His point, which I think is well known, is that it is very difficult for states, federal governments or anyone to privatise assets. He knows it will be a barney and there will be trouble. As part of a federal government he assured all Treasurers in the room, ‘I am prepared to get behind you, guys, and give you whatever support you need. These things take a lot of effort to do but, ultimately, the renewal of infrastructure is an important national goal and we need to work through these things.’
I noticed the Chief Minister signed up to those reforms at the COAG meeting, and it is good policy. It will be difficult for jurisdictions to privatise assets, as it always is, but whilst we are looking at it in the Northern Territory, we have never said we will privatise any aspects of the Power and Water Corporation. That is off the table.
In the last few minutes I have to wind up, I will put on the public record my thanks to a couple of people. Firstly, I personally thank Alan Tregilgas, a former Under Treasurer and Utilities Commissioner who has provided fantastic advice and been great to work with. I was reading this National Electricity Market case study at Christmas on the way home from holidays; I had a couple of hours sitting in a plane and read it from cover to cover. It dawned on me that Alan Tregilgas was taking us down exactly the right path; his expert and technical knowledge was second to none and it was the right thing to do. Mr Tregilgas, I thank you from the bottom of my heart and I am sure future generations of Territorians, if these reforms get up, will also thank you for your contribution as well.
There are a couple of other people to thank, and one who has been particularly tireless is the Managing Director of the Power and Water Corporation, Mr John Baskerville. He has done an exemplary job. He has been ridiculed and targeted by members in this Chamber, but the job he has done under very difficult and trying circumstances has been first class. He has kept the lights on. It is not an easy reform to undertake. Whilst I say it is all a bit ho-hum and it has happened everywhere in the country, change is never easy and John Baskerville has done a wonderful job in steering the ship which is the Power and Water Corporation, and there is still a lot more to do. The other person is my good
friend Craig Graham, the Assistant Under Treasurer, and his advice is always excellent.
Having said that, I will not let the three of them off the hook; there is still a pile of work to be done and I sincerely hope they will be with us for some time yet. They have done the Territory a great service with the work they have done. I commend this bill to the House.
Motion agreed to; bill read a second time.
In committee:
Mr WOOD: We would like to ask some questions on the second reading speech because it is a very important part of this bill. I have some questions, but I will do it properly, so the shadow minister should ask hers first. If you have any questions on the second reading speech, you can start and I will jump in where necessary.
Ms MANISON: I will cut to the chase, minister, given many questions were raised about part 5A and proposed section 53A. What would you define as assets with the government owned corporation?
Mr TOLLNER: An asset includes a legal equitable interest of any kind in property of any kind and a chose in action or other right.
Ms MANISON: Could you drill down a bit further from that, minister? Would that include things like generators, power stations, customer groups and people?
Mr TOLLNER: Yes, for a bit of clarification, it is physical assets which are on the balance sheet, rather than customers.
Ms MANISON: Thank you. Going to definitions around relevant entities, we know what a government owned corporation is. Can you give me an example of what a subsidiary is in this legislation?
Mr TOLLNER: Indigenous Essential Services would be a subsidiary.
Ms MANISON: What would a statutory corporation be? Could you provide a definition around that and the purpose of that being classified as an entity under this legislation?
Mr TOLLNER: A statutory corporation would be any corporation established by a piece of legislation.
Ms MANISON: Could you give definitions around a corporation or a body corporate that we have within the legislation, and examples of that and how they would be used under this legislation?
Mr TOLLNER: Yes, Indigenous Essential Services is a proprietary limited company, so it would fit into that category.
Ms MANISON: Within your definitions of a subsidiary, a statutory corporation, a corporation, a body corporate – why is there a requirement within this legislation to have all of those entity definitions, given you are saying the purpose of this part of the legislation is to allow the transfer of assets and liabilities between government owned corporations?
Mr TOLLNER: It is to give us the flexibility we may need in the event of setting up of new corporations.
Ms MANISON: As it stands in this legislation with your definitions of all the entities, do all of them have to be owned by the Northern Territory?
Mr TOLLNER: As subsidiaries, (a), (c) and (d) would be owned by either A, C or D. By that, you would say a subsidiary would have to be a subsidiary of a corporation owned by the Northern Territory.
Ms MANISON: Going back to the definition around corporations, what is the full definition of a corporation as defined by the Corporations Act 2001?
Mr TOLLNER: There are companies governed by corporation law which are defined by that act; it is federal government legislation.
Ms MANISON: It does strike me as being quite broad, especially in how (d) is written within the legislation. You can read it two ways. You can read it as being a corporation, as defined by the Corporations Act 2001, full stop, and you go on to say the body corporate which is owned by the Territory. That is fairly loose in its language and definition. Would you agree with that, minister?
Mr TOLLNER: Yes, I think the defining part of proposed section 53A(d) is the last bit of the sentence:
- … that is owned by the Territory …
It must be a corporation owned by the Territory.
Ms MANISON: Do you feel confident that definition is rock solid in the legislation, and that it could not be tested?
Mr TOLLNER: The advice I have is that it is rock solid.
Ms MANISON: The definition of a corporation is amended in the Corporations Act 2001. Will that amendment automatically be picked up by the definition of relevant entity in this bill?
Mr TOLLNER: Yes.
Ms MANISON: Going back to definitions, how does the Commonwealth’s Corporations Act 2001 define a corporation as it stands in proposed section 53A(d)?
Mr TOLLNER: I do not have a copy of the Corporations Act with me at the moment, but maybe you could Google it and have a look yourself.
Ms MANISON: It is an important question, minister, so …
Mr WOOD: Can I tag on to that question? Minister, you have said you need these additions to that section of the act, but in both your second reading speech and explanatory notes there is no explanation as to why you need them. In fact, your second reading speech says, and I think the member for Wanguri said this as well:
- … changes are also being made to the Government Owned Corporations Act to provide an appropriate mechanism to transfer the assets, liabilities, contractual rights and obligations of the Power Retail and the Power Generation businesses of the existing Power and Water Corporation to the newly-established corporations.
The explanatory notes say pretty much the same thing; they also say that was the reason for this change. There was no explanation as to why you need (b), (c), (d) and (e), and that makes this a bit suspicious. All that you said at the beginning of your second reading speech is that you need to transfer assets from one government owned corporation to another, so you can see why people are a bit worried about what else is in there.
Mr TOLLNER: The easiest explanation I can give you is the legal advice provided to me, which says:
- Part 5A Division 2 of the Government Owned Corporations Act provides for a generic head of power to make regulations facilitating the transfer of all or part of the business of a government-owned corporation to the subsidiary of a government-owned corporation, another government-owned corporation, a subsidiary of another government-owned corporation or a government entity. This type of generic approach to restructuring is quite common across the various jurisdictions and is regarded as a very effective mechanism. It allows for flexibility and provides a model process for any further re-organisation of the various entities in the future.
Mr WOOD: One of the problems was that we have never had an explanation. We had a second reading speech which does not explain it, we have had PAC meetings which have not explained it, and I think that is the first time we have heard an explanation which comes somewhere close to what we would expect.
Mr TOLLNER: The Attorney-General has been very good and Googled the Corporations Act. For the benefit of the member of Wanguri, I might give her the meaning of a corporation:
- Subject to this section, in this Act,
corporation includes:
(a) A company; and
(b) any body corporate (whether incorporated in this jurisdiction or elsewhere); and
(c) An unincorporated body that under the law of its place of origin, may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose.
(2) Neither of the following is a corporation:
(a) an exempt public authority;
(b) a corporate sole.
(3) To avoid doubt, an Aboriginal and Torres Strait Islander corporation is taken to be a corporation for the purposes of this act.
I hope that provides a good explanation.
Mr ELFERINK: By definition, a corporation is soulless.
Ms MANISON: Going back to the relevant entity definition, if you truly wanted to reduce the fear people have about what will happen to Power and Water Corporation assets beyond this structural separation, why can you not proceed with this legislation having the definition of a relevant entity as a government owned corporation? Why do you need to have other definitions?
Mr TOLLNER: I am not the one creating fear about this; that is other people in this place. We have been upfront in saying we are not privatising any aspects of the Power and Water Corporation.
Mr WOOD: I heard your definition, and this might be an unusual question, but when you were giving an explanation – can the government have a body corporate? I tried to Google it last night, but I am not as good at Googling as the member for Port Darwin. Is a body corporate only a private company?
Mr TOLLNER: We cannot think of an instance where that is the case, but I have been advised it is drafted to be as broad as possible to allow whatever flexibility is required to ensure we achieve a proper structural separation.
Ms LAWRIE: If the drafting is as broad as possible to allow any scenario, as you have just said, it allows the sale of all or some assets to a corporation. You said it is as broad as possible.
Mr TOLLNER: No, it is only a transfer.
Ms LAWRIE: Can you categorically rule out that this provision does not allow you, as shareholding minister, to sell all or some of the assets to a corporation?
Mr TOLLNER: Absolutely.
Ms LAWRIE: It is just a transfer within government-owned relevant entities?
Mr TOLLNER: It is within government ownership. Any sale of any corporation would have to come, by virtue of this legislation, into parliament for debate. The government has been very clear in saying we are not selling the Power and Water Corporation or any of the new entities being created.
Ms LAWRIE: Have you received legal advice to that effect, Treasurer?
Mr TOLLNER: I do not need legal advice to that effect. I sit in Cabinet and it has been very upfront in telling people we are not selling any aspect of Power and Water.
Ms LAWRIE: You are providing us with advice that a sale of assets, or some assets, would need to come back to parliament. The provisions here, as broad as they are, in your own description, with the advice you have provided on what corporations are under the 2001 Commonwealth legislation – do you have legal advice, to satisfy parliament, which could back up the advice you are providing during the committee stage? This could be provided either today or at a later stage.
Mr TOLLNER: As I said, we have made a decision that we are not selling Power and Water. We do not need legal advice to say that; it is like me asking you if you will provide legal advice that you are not going to the moon this weekend.
Ms MANISON: With regard to a government owned corporation, after it transfers assets to a subsidiary, a statutory corporation, a corporation as defined by the Corporations Act, a body corporate, etcetera, how much control does government have over what happens to those assets? Within this legislation, what control is there to stop, for example, a sale from the new entities they are transferred over to?
Mr TOLLNER: There is a division of responsibility here. The government will obviously be the corporation shareholder. The board and managing directors of the new corporation will have the ability to buy and sell assets, but they will not have the ability to sell the company. If they have an old car they might choose to sell it. If they have a piece of equipment which is run down and no longer of use to them they may choose to sell it. They may well choose to buy another car or another piece of equipment. That is the domain of the managing director and the board. It is not something the shareholding minister would typically be involved in, but a sale of the corporation itself would have to come to parliament for discussion.
Ms LAWRIE: Based on that answer, could the board overseeing generation assets make the decision to sell some generation assets without needing to come back to parliament?
Mr TOLLNER: If you want legal advice which says as shareholding minister I cannot allow the unfettered sale of any GOC, it will be easy to come by. I would have thought that was obvious; I will not be going out tomorrow selling businesses on behalf of government.
Ms LAWRIE: That was a response to an earlier question where we were seeking any legal advice you had, and you, in short, said you would not be providing any, with a reference to travelling to the moon as well. My question was, in the scenario you just provided in your response, could GenCorp sell generation assets without having to bring it to parliament?
Mr TOLLNER: The Power and Water Corporation currently does exactly that. Do you think it is appropriate or are you trying to assert that the Generation Corporation should have to come to parliament every time it wants to sell an old generator or buy a new one?
Ms LAWRIE: Under the scenario and powers provided in this legislation, could the Generation Corporation sell new generators at Weddell?
Mr TOLLNER: If under the Government Owned Corporations Act, it would require the approval of the Treasurer if the sale was over a certain threshold.
Ms LAWRIE: Could you provide parliament with that threshold?
Mr TOLLNER: We will get that for you.
Mr CHAIR: While we are getting that information, I will say that at some point we have to come back to clauses. We should be doing these in sequence; I am allowing you some general questions. We are in clause 20 at the moment, and I will go back to the beginning so we can work our way through because the standing orders say we cannot go backwards. I will do that in a moment, if that is all right, member for Nelson?
Mr WOOD: Yes. To clarify – I should not use the word ‘manipulate’ to refer to the discussion – but the section we are talking about is clearly in the second reading speech.
Mr CHAIR: That is okay, and is why I am allowing it to go ahead. We are still waiting on the Treasurer to give us an answer.
Is there an answer on that, Treasurer, or …
Mr TOLLNER: Yes.
Mr CHAIR: Does someone else want to ask another question?
Ms LAWRIE: I have a process question on the issue of the threshold in the scenario where the GenCorp board decides it will sell generation assets, generators at Weddell for example, once we find out what the threshold is. If it is above the threshold it must seek the shareholding minister’s approval. Do you have to take that to Cabinet for approval, or, as shareholding minister, can you alone sign off on it? The second part of that question is what are the requirements for you to report that sale to parliament or the public reporting of the sale, and in what time frame?
Mr TOLLNER: I am not required to do that. I am informed that is part of my responsibility as a minister, but having said that, I am aware that we do things like gas sales. Generally, if they are of a size and nature I would take them to Cabinet, but under the letter of the law I am informed that as shareholding minister and Treasurer I have that authority.
Ms LAWRIE: With the authority resting with you as shareholding minister, the subsequent question I have is what is the requirement for reporting the sale of significant assets, without yet knowing the answer to the threshold? We are talking above threshold here, not below, where the board makes those decisions. Above threshold decisions come to you as shareholding minister. We have just heard you do not have to take that to Cabinet and that it is your decision and yours alone. What process occurs in reporting those decisions you sign off on as shareholding minister? Is it the tabling of that information, is it reported in the Statement of Corporate Intent, is it an annual report? How is the Territory informed by you, as shareholding minister, that you have signed off on a divestment of assets above the threshold?
Mr TOLLNER: I suggest that would be done on a case by case basis. The reason I say that, and I will get some clarification on this in a minute, is that some asset sales will be commercial-in-confidence. I am sure, Opposition Leader, you will be aware, for instance, if the Power and Water Corporation was to sell gas, those things do generally remain commercial-in-confidence.
Ms LAWRIE: The price, not the sale.
Mr TOLLNER: The price, yes, but if you know the quantity and global price being paid, one will see the income you are getting from it. It is not too hard to work your way back to the price per petajoule. I suggest there would be some flexibility around that, given the commercial-in-confidence nature of some sales.
I am just informed you will find the threshold under section 38 of the Government Owned Corporations Act. Part 2A says:
- (a) the threshold agreed by the board of the Government owned corporation and the shareholding Minister; or
(b) if the threshold is not agreed under paragraph (a)-the threshold determined by the shareholding Minister.
Ms LAWRIE: What we have in this situation is that you and the board identify the threshold. That threshold has not yet been identified in terms of the divestment of public assets. In any event, any threshold agreed between you and the GOC will be determined on a case by case basis as to whether or not you would make a divestment of assets public, signed off by the shareholding minister, because you would consider commercial-in-confidence on that.
At no stage is there any transparency on an agreed threshold, or would you make any agreement on the threshold public? Then at no stage is there transparency on a divestment of assets. Is that the scenario we are being informed of?
Mr TOLLNER: Let me make this clear, if you did not hear it before. The government is not interested in selling Power and Water Corporation assets. That, in the main, will be a role for the boards of the new government owned corporations.
Ms LAWRIE: However, the legislation has provision for that. When we look at the legislation and seek advice from you, we are advised that above a certain threshold – we can only assume because there is no amount set as the threshold, that it would be a significant divestment of assets, rather than a minor one. We are not talking about the shedding of a couple of trucks out the back.
I take you back to our original question, which went to generation. If there was a divestment of generators, for example, at Weddell power station, what comfort can you give Territorians? This is the point of the committee stage; what comfort can you give Territorians that the public would be advised of that, and what process would follow, because we have just found there is no agreed threshold? Is there a view in the advice you are receiving on what the agreed threshold would be struck at for the divestment of significant public assets? What process can you satisfy in which Territorians would be advised of the divestment of significant public assets, for example, the Weddell power station.
Mr TOLLNER: Those things would show up in the company’s annual reports. They may well show up in the Statement of Corporate Intent. I do not want to go too much into asset sales, because government is looking at trying to sell some of the Power and Water Corporation’s gas. Those negotiations are taking place. I will not enter into any discussion about that because they are all commercial-in-confidence.
For the purposes of where you are heading, that is, that privatisation is coming, I will say it again: we are not privatising any Power and Water assets. If a generator is to be sold, it will be sold because it is redundant, not needed or beyond its use. We are not privatising any part or parts of these corporations.
Ms MANISON: Do you have any capacity, as shareholding minister, to stop them if a board decides it wants to sell them?
Mr TOLLNER: Certainly, over a certain threshold that has been agreed to by the board and the Treasurer. I do not have the exact figure of the threshold with me at the moment, but Power and Water is selling assets every day; there are cars, equipment, etcetera, going. Similarly, they buy stuff every day. That is what companies do, but when it comes to the privatisation of a corporation or any of these new corporations, that is not on the government’s agenda, and it is not something we are proposing anywhere.
Ms LAWRIE: To cover questions because we are not trying to be cute and want to move on, it is a matter of significant interest to Territorians with the issue of significant assets.
We have been told there is not a threshold, and in your last answer you referred to the threshold. If there was an agreement on thresholds struck between the board and the shareholding minister, could you give us a commitment that you would advise parliament of the threshold? If there is a view of a board, be it GenCorp, RetailCorp or the Power and Water Corporation, to divest itself of significant public assets – we are not talking the sale of trucks, but significant public assets – then there is a request by parliament that Territorians are advised. To give comfort to people, if you strike an agreement with boards on the threshold by which they would then, above the threshold, need your sign-off as shareholding minister, will you commit to advising us?
Mr TOLLNER: As I said, those significant sales would show up in any annual report.
Ms LAWRIE: What is wrong with giving that commitment, Treasurer?
Mr TOLLNER: That is something the corporation would do anyhow as part of its responsibilities as a corporate entity. It has to advise on things like that. If PWC does a gas deal, something like that will show up on the books and will be seen as a sale. I do not know what point you are getting at. Are there particular assets you are interested in, such as generators? Do you want us to report if it sells a generator? Are you ruling gas out, saying you do not need to know about that? What is it you want to know about?
Ms LAWRIE: Very clearly, we want to know about any significant asset being divested. It is a public asset, so whether it is gas, generators, a chunk of major retail clients – of course it would need to meet a significant test. We cannot hear from you, Treasurer, what that significant threshold is. We are asking you to advise, as the Treasurer and responsible shareholding minister, that when threshold agreements are struck between the boards and the shareholding minister, bearing in mind there would be three different boards covering a range of assets, we will be advised what that threshold is. Further, my request to you as Treasurer and shareholding minister held accountable to taxpayers, not the board, is for you to advise the parliament of any divestment of assets above the threshold.
Mr TOLLNER: Yes, that will be done when annual reports are tabled every year.
Ms LAWRIE: No, you will not.
Mr TOLLNER: What do you want? That is public information.
Ms LAWRIE: Accountability, transparency.
Mr WOOD: I will ask a few questions about some of the statements in the second reading speech. You said:
- … the reforms are designed to improve the competitive environment to make it more attractive for the private sector to enter the electricity market and provide competitive electricity services to Territorians and Territory business.
Why is QEnergy already in the market if it is not attractive at present?
Mr TOLLNER: QEnergy is in the market. It was in the market under the previous Labor government. It retailed this building, so is already here.
Mr WOOD: What is the problem? It is already here, so what needs to be done? Why was it attracted here initially? Has it been an uncompetitive market? Companies are saying Power and Water is not transparent. There is a perception it is cross-subsidising and that is why we are making changes. If nobody was in the business already, perhaps I would agree with you, but QEnergy is already here. Has this been a stumbling block, the issue of Power and Water not being transparent, having vertical and horizontal dimensions? Why is QEnergy here in the first place?
Mr TOLLNER: QEnergy only has a handful of customers here. It would like to get more and cannot understand why it cannot. Where we want to see competition, if possible, is in the area of generation. The concerns competitors have, including QEnergy, are that it is very difficult to compete with a monopoly style business because it has an ability to move costs within the organisation. I wanted to mention employee numbers in each division of PWC, which the member for Wanguri read out, in my summing up speech, but I forgot about it. She set them in stone, but you can never set these things in stone because they are so fluid. People move between one part of the corporation and another very regularly; it is that change of where resources go which allows an uneven playing field when it comes to the marketplace.
Mr WOOD: I will get back to that a little later, but we have two companies looking at the market. QEnergy has told us it services business, as does Northern Power. I understand Northern Power is not interested in households and neither is QEnergy. The first question refers to your statement about competitive electricity services for Territorians. What benefit is this to normal Territorians? What benefit will there be to householders in the Northern Territory, even small businesses, if the only companies competing in this market are taking major power users away from the Power and Water Corporation?
Mr TOLLNER: The point you make is a good one. A large part of the marketplace is currently non-contestable, that is, other players cannot get in there. That is largely to do with how the CSO is delivered. There are ways of changing that which allow people to compete for households. One of our members, it might have been the Attorney-General, said that in states and territories around Australia which have done this, between 55% and 80% of households are on non-regulated tariffs; they received a better deal by going to a competitor in the marketplace. It would be wonderful to get to that situation.
The point you make about the big end of town, saying it allows retailers and generators to cherry pick Power and Water’s customers, is true. The big end of town is paying cost reflective prices. There is no subsidy for them and, ultimately, they are the ones which are contestable. QEnergy got the retail deal on this building we are in because the Legislative Assembly is a contestable customer. The point I made in my summing up was about an old adage I knew after spending many years in sales. ‘It is far easier to keep an existing customer than it is to try to attract a new one.’ The competitive advantage is with the Power and Water Corporation or the newly created GOCs, but if they do not become more competitive they may lose that business to other generators or retailers who are more competitive. That is, in many ways, the whole point of this legislation. We are trying to create a competitive environment where customers will go to what they see as their best option.
Mr WOOD: Thanks, minister. One day I will work out how Power and Water can sell electricity to another company and cannot compete with it, but that is probably to do with wholesale and retail prices.
Mr ELFERINK: That is about the cost of putting retail …
Mr WOOD: That is right. I have a question which has not been answered and I am still concerned about it. You would have companies like Northern Power and QEnergy taking the big juicy bits from the retail market. Does it not make sense that Power and Water would receive less money, therefore its profits would be diminished? I have heard Power and Water will become more efficient. I keep asking the question – please show me when it comes to generating, how it will become more efficient. I hear answers which I partially understand, but when it comes to the crunch I still have difficulty working out that if you have fewer customers, that means less revenue. If you have less revenue you have less profit, and that means the government receives less money. At the same time, is it still required to operate most of its generating equipment or does it close that down?
These are some of the fundamental questions. If we had more time we may have come up with some answers, but we have not and that is why I am concerned about what is happening.
Mr TOLLNER: I am glad you are getting to this. It may be one of the nubs of the issue for you. An important point to understand is that customers are not subsidising other customers. I hear it said that people living in the northern suburbs are subsiding people who live in the bush, or the big end of town is somehow or other subsiding households. If you take away the big end of town you take away part of the subsidy for the household. That is not the case; the subsidy is provided by the government in the form of a CSO. If you took away the CSO, everybody would be paying cost reflective prices, which would vary greatly around the Territory. However, we have this CSO in place.
No customer is subsidising another customer, so what we have at this point are non-contestable customers. They are the ones, in the main, receiving the CSO. The reason they are non-contestable is because these other companies, the competitors, cannot access the CSO at this stage. There are moves afoot to work out how to make the CSO available in order to have competition right through the marketplace.
As I have said, in other parts of the country that currently occurs, with between 55% and 80% of customers not on a regulated tariff. They are getting a lower price than those regulated by government, or they have things like deals on smart meters where they have real time tariffs. They can determine their usage by the time of day they switch appliances on and off.
This idea that you take away the big end of town from the Power and Water Corporation and all of a sudden it cannot provide the same service to households is wrong, and it is a misconception about how our utility operates.
Mr WOOD: Power and Water makes something like $450m profit. I say it is profit, and I know what you will say, but from that point of view it has made money. It has a lot of debt, I understand that, but if you take part of that $450m away from government by giving some of it to another company, like QEnergy or Northern Power, that amount drops. That amount of money is still going into the total bucket of money the government runs on. You will have less money in Power and Water, with more money going to QEnergy and Northern Power.
Mr TOLLNER: Could I correct you on a point there? It is not profit, it is sales revenue. There is a big difference. The Power and Water Corporation has never returned an economic profit; it very rarely returns an accounting profit, and when you take into account the amount of government-funded subsidies which go into the corporation, it is more than $100m, in most years, in losses. It would not be sustainable without that government subsidy. I want to clarify that it is not $400m profit. It is $400m in sales revenue, but that is not profit.
Mr WOOD: Okay, but the more sales revenue, the less debt, because you are making …
Mr TOLLNER: Not necessarily; can I tell you the Mick and Pat story about selling watermelons? They buy watermelons for 5, sell them for 5, and after 10 years in business they realise they are not making any money, but they have a lot of sales revenue.
Mr WOOD: As much as I like watermelons, we can live without them, but we cannot live without electricity. My problem, still, is: how will Power and Water work with less sales revenue? You have also said the current structure of the Power and Water Corporation is not conducive to efficient electricity supply to the Territory market.
The words ‘efficiency and efficient’ have come up many times in this debate, even in your media releases. You did mention to me before, and I hope you do not mind me repeating it, that the network is not very efficient. I do not know if that is the case, but I suspect it is. We have not been discussing the network, only generation and retail. You might be right, but I am not here to discuss that because it is not part of this bill. I want to know where the inefficiencies are because when a minister says, ‘We are going to make it efficient’, a counter statement is, ‘If that is the case, show us where the inefficiencies are’.
It is a real concern for me because gas generated electricity seems simple. How do you make it more efficient? A competitor like Northern Power will come in with brand new equipment and produce electricity at a cheaper price. That puts Power and Water at a disadvantage because I am sure it will not sell its generators until they wear out; the reason it is in debt is because it capitalised. There is not enough clarity about what is inefficient in electricity generation.
Mr TOLLNER: We could go in a mile of directions here. Power and Water does not necessarily run its most economic generator first. It may use its oldest one first because, frankly, it does not care and it does not matter. It is the same point I was making about Indigenous Essential Services. As much as you would like to put competition into that place, I cannot get my head around how you could do that. When you are trucking $60m worth of diesel around you do not really care; when there is a universal tariff, it does not matter. It is just taxpayers money going into it, and there is no incentive to make things more efficient.
Talking of efficiency, I made the point that the network price determination of the Utilities Commission made the point that the network was 27% less efficient than a comparable network in the country. In the conversation I had with you a couple of minutes ago, I said that if the network is 27% less efficient, one would imagine the whole organisation would be 27% less efficient, because you do not run one agency of your company inefficiently; it generally occurs across the board. It is a culture which was identified as part of the second Utilities Commission investigation into the system black we had. There was a culture of inefficiency across the organisation. That was determined by the Australian Energy Market Operator and Evans and Peck. For most Territorians it would not be a bridge too far for them to think Power and Water was an inefficient organisation. You would struggle to find many people who would say, ‘This is a lean, mean business’.
The other point is the majority of other generating utilities turn generators over every five years to make sure they have the most efficient generators. That may not be the case with the Power and Water Corporation because it does not matter whether it is efficient or not. It already has market share; it owns all customers and does not have to worry about competing. However, throw a bit of competition in there to the point where it could start losing customers and it would very quickly start to sharpen its pencils and find cheaper ways of doing things with more reliability.
Mr WOOD: Yes, I understand that and have not said I oppose competition, because competition already exists. I do not know if there is a fair process for competition when Power and Water is already in debt, and you keep going on about how much debt there is and how we must pay for it for generations to come. Is Power and Water in a position to buy new generators because it wants to be competitive or does that put it into more debt?
One of the reasons it is in debt is because it spent a lot of money on upgrades of the poo shooter, substations and all sorts of things. I am not here to argue the case that Power and Water has not been inefficient by the way. You are highlighting that we should have looked at this issue in a much bigger context through the Public Accounts Committee. We could have taken a more holistic approach, including the networks, but we were not given that opportunity. We have had to deal with what is in this legislation, and we have had to deal with one meeting of the Public Accounts Committee. The questions I am asking are ones we could answer if we had more time.
Going back to the second reading speech where you said the:
- … vertically and horizontally-integrated utility has proven to be administratively complex, to the detriment of the financial performance …
What you are putting forward to overcome that is developing three GOCs. Is that correct? Why are you making one company divide itself into three?
I will go back to my statements about Origin. Origin Energy is classed as an integrated company. I presume integrated means it works as one company but has quite a few divisions within it. I think it has exploration, it might have production and it has generation. I do not know whether it has part of the networks, but it certainly has retail. It has one board, and I am sure the left hand knows what the right is doing because that is very important when you are running a company where there are price and tariff fluctuations. We are setting up a company which will have three boards.
Mr TOLLNER: Three companies.
Mr WOOD: Three companies. Can you tell me if there is one private electricity company in Australia which does exactly that? If we are trying to be fair in competition with Power and Water, because we have to say, ‘You are in the market’, tell me where there is a company which breaks itself into three separate ones.
Mr TOLLNER: An enormous number of generators are just generators. I am not certain on the retail side, but there may well be. To clarify for you, Ergon is a retailer and owns remote networks, Origin is a gentailer, a generation and retail business, which performs gas exploration and gas production as well.
Mr WOOD: It has one board.
Mr TOLLNER: Yes, that is right. There are some subtle differences with what is happening in the Northern Territory which have also happened on the eastern seaboard. You will note, when you read that National Energy Market case study which was handed out, that in the eastern states their utilities were so big they could break their generators up several times and put them into various different combinations. In the Northern Territory, that is not the case; we are not intending to break up the generator business into several parts. That is why we are very keen to encourage competition to come to the Northern Territory. We want competition, but we do not believe Power and Water generation is big enough to split into two so we can have instant competition in the generation marketplace. That is a slight difference. I am trying to think of the other point you raised.
Mr WOOD: Show me a company which breaks itself into three and a company which does both generation and retail. Origin is a classic example, a big company, one board, and it does not turn itself into three companies.
Mr ELFERINK: I think Microsoft was broken up into two by order of the Supreme Court of the United States.
Mr TOLLNER: When you are worried about monopoly power, that is when you break them up. We are not intending to break up the generation business because it is not large, and there is some interest in other generation businesses coming to the Northern Territory, but, generally, what you are trying to create is a competitive marketplace. That was done in Queensland, New South Wales and Victoria because they had that ability to build businesses which suited the size of their marketplaces. Here we are splitting the Power and Water Corporation; it is still a relatively large business, large enough in today’s world to adequately have separate generation and retail businesses.
Mr CHAIR: We are getting a bit away from the legislation itself, so if we could tighten it up a bit.
Mr WOOD: I will try to get back to the principle. The whole principle of this legislation is to break Power and Water into three companies. I am questioning the minister as to why that is necessary because other companies in the business do not do that. They have one board and integrate it. We are disaggregating this company and we are having three boards which seems …
Mr CHAIR: I was not going to stop you; I was asking if you could keep it tight. I did not want it getting further and further out.
Mr TOLLNER: To explain, this is, I suppose, tranche one of the reforms. We are creating generation and retail businesses. I suggest in the future there will be discussions about splitting off networks, splitting off water and sewerage and maybe incorporating the gas sales division into a government department. There is a range of options, but this is quite a complex matter. We want to take things one step at a time, so rather than blow the whole organisation up, as someone suggested, and create six new government owned corporations, we will take it slowly with generation and retail first, bed that down, make sure we get a marketplace operating – look at separating networks down the track, as well as water and sewerage and the gas sales division.
Mr WOOD: You hit the nail on the head when you said it is complex. To get back to my original issue, I am disappointed that if you are now talking about the possibility of breaking it up into sewerage, water and gas, which only came into this debate more or less by accident – I was interested in how gas would work. It is something which should have been looked at much more holistically, but I will not drag on that. My other question, which I have raised in parliament, relates to how the Auditor-General said you could produce transparency and show each division of Power and Water and how they operate through the accountancy system which applied before 2008. My argument was that if the Auditor-General said you can show that transparency, you can still have the one board.
I will get back to my argument about Origin Energy. Origin surely has internal divisions within its company. It knows what it is spending within that company and the auditors, when they look at that company, can also recognise that as well. Why do we not model ourselves on that? That is instead of setting up what I call a more bureaucratic approach, which will cost money, and we have not worked out how much money it will cost. We could do it under your ministerial direction. You could tell Power and Water you will show, through your accounting system, where the money is going in each of those divisions and identify cross subsidies. The Auditor-General put that forward, and he knows a bit more than I do.
Mr TOLLNER: I am not having a crack at the Auditor-General in any regard; I have the utmost respect for him. Accounting separation has been, in some ways, the Holy Grail for Power and Water. It has been working on it for years, but has not yet gotten there. It is easily said, but not necessarily easily done. The concerns I have with undertaking accounting separation are that we are a rapidly growing economy and need more generation capacity into the future. At the moment the Northern Territory government has a debt problem; we do not have the ability to buy more generation capacity, so we must look at the private sector stepping up.
How you get the private sector to step up is to allow market competition. I have a media release from the Energy Supply Association of Australia. In the fifth paragraph it makes the point that:
- Competition is the self-sustaining way to keep pencils sharp and prices down in the long term and ensure much needed innovation and efficiency benefits to NT consumers.
Whilst I have ruled out privatising Power and Water assets, it is interesting to look at those states where they have privatised networks. It was also interesting listening to the member for Casuarina. He is saying no one will buy a network, but the network is the most valuable part of the organisation by a country mile. There are superannuation funds around the world lining up to buy networks; they snap them up as quickly as they can.
Mr VATSKALIS: Only if they are guaranteed a return. That is why they are paying so much in other states.
Mr TOLLNER: They are guaranteed a return. They are a regulated asset with a regulated price; it is as good as money in the bank. That is why superannuation funds grab them.
The other interesting thing to note is when you look at reliability and how it is affected – you saw what happened with the system black, where every householder received an $80 credit in their bill. In the privatised networks that $80 comes from the shareholder, so they are very keen to make sure they have a very high level of reliability because any type of black out affects their bottom line and shareholders. I have a couple of graphs which show the reliability of privately-owned networks as opposed to publicly-owned networks where, ultimately, whether it is the Power and Water Corporation who provides the credit or a government subsidy, it is the same thing. You see that private networks have reliability standards so much further ahead than publicly-owned ones.
Mr WOOD: The only thing that I will say about competition, by the way, is it must be ethical. Just see where Coles is going at present with the ACCC, when you get a duopoly. We must be very careful we do not put it up there as the be all and end all.
You mentioned in your response that Power and Water spoke about the spring. I will give you my quote from the PAC hearing. I said:
- I want to know why you could not do it within the divisions you already have, instead of having GOCs. You just told the committee you have nearly got to understanding all the costs under the existing divisions. Is that correct?
Yes, we are almost there.
Why can we not achieve what Power and Water has nearly achieved? We perhaps need a bit more to finish it off under a divisional separation audited by you through a ministerial direction, which would save us money and at least compete with big companies which do not have to go through this so-called bureaucratic division you are trying to introduce. Private companies do not seem to do that, so why are we making the Power and Water Corporation do it?
Mr TOLLNER: There are a couple of reasons, and I will start again. The first and overwhelming reason is that we agreed to it in the mid-1990s, and the previous Labor government was turning up to energy minister council meetings agreeing to national reforms, never knocking up an objection. Somewhere along the line we should look at doing what we say we will do. That is one thing.
Ms LAWRIE: We deregulated. That is a furphy.
Mr TOLLNER: Secondly, we have an enormous debt and …
Ms LAWRIE: That is another furphy.
Mr TOLLNER: … deficit problem. It is all right for madam over here. She never had a problem borrowing or spending money, it came naturally.
Ms LAWRIE: One billion dollars in networks alone.
Mr TOLLNER: We have some big concerns about going further into debt and increasing our deficit. We do not want to do that. We know our economy is growing rapidly and we need to get more generation capacity into the system in the next few years if we are to meet the demand our economy will be generating. We need to attract private operators. How do we do that? We need to level the playing field. How do we level the playing field? You make like compete with like, a generation business competing with a generation business, a retail business competing with a retail business.
You have to understand that at the moment and into the future Power and Water will hold all the cards; it has all the customers, established infrastructure and has employees here. It is the one holding the competitive advantage. We are trying to create a level playing field. Competitors will know Power and Water still has a competitive advantage, but let us hope they think they can come here, run a power station and be able to take some of those customers off the Power and Water Corporation, otherwise we will not have the generation capacity we require into the future.
It is also unholy that we are paying $155m a year in subsidies to the Power and Water Corporation, with a population of 240 000 people. That cannot continue. The subsidy which goes into the Power and Water Corporation is like that every year. Sooner or later this corporation will not bankrupt itself, it will bankrupt government. We cannot keep flogging a dead horse. We need a bit of competition in the marketplace and things definitely need to change.
It was initially identified by the RMB, as our Health minister said, but more importantly, it was identified by Moody’s as one of those areas which was a drag on Northern Territory government finances, and it put our credit rating on a negative outlook. All of these messages are coming to us as that we must change the way things are. These reforms have been going on in Australia for 20 years; we have seen how they have been delivered around the rest of the country and have learnt those lessons. The people we have on board who are putting these reforms in place are experienced operators. They know how the market works around the rest of the country.
Furthermore, we want to get into the business of supplying the rest of the country with energy. The only way to do that is to adopt National Energy Market rules. We need the AER here; it does not just regulate electricity infrastructure on electricity, it also regulates gas and gas pipelines. If we are ever to connect to the national gas grid we must have the AER here anyway. The AER was also identified by Evans and Peck and AEMO as being inadequate to properly regulate the Power and Water Corporation. All of these things are starting to build, and over time things must change one way or the other. I am certain the opposition knows this too, but is more interested in playing funny political games and trying to scare people with privatisation and a whole lot of other things rather than knuckling down and saying, ‘Gee whiz, this is a bloody hard ask, let us do it’.
At the energy ministers’ conference last week, it was Ian Macfarlane who gave credit to Queensland for the way it handled the coal seam methane issue. He said it could never have happened unless everybody was united. The federal Labor government, Anna Bligh and the opposition were united, shoulder to shoulder, in getting those reforms through. He said, ‘You could not have done it without the support of the opposition and all players in parliament’.
This debate is so infuriating because I am certain, in my heart of hearts, that the people on the other side know exactly why these reforms are necessary but would rather play cheap jack political games than knuckle down and do the hard work and support government to bring these reforms into place.
Mr CHAIR: We are getting off subject
Ms LAWRIE: I have a technical question on a generation matter raised by the Treasurer. It is not off the subject; it is directly relevant to what he just said.
Mr CHAIR: I do not feel what he is saying is relevant to the debate at the moment.
Ms LAWRIE: He is responding to the second reading speech.
Mr CHAIR: I will be listening very carefully.
Ms LAWRIE: Yes, thank you. Treasurer, in that response you said there was a need for deregulation to allow competition. That, as you admitted before, already exists. You said the split is to tackle debt when the split will increase cost and the networks price alone will add about $1bn in debt. The interesting point there is this idea that it is required to provide for additional generation. How do you reconcile that statement with the Utilities Commission 2013 power systems review report? It says:
- The Darwin-Katherine system is expected to have sufficient generation capacity to main supply under any credible demand scenario despite the loss of the two largest generation units in the system (an N-2 event) through to the summer of 2019-20, given the commissioning of Weddell Unit 3 in April 2013
Mr TOLLNER: The next term of government is 2019-20. It is not that far off. I know for you it looks like a lifetime away – $5.5bn of debt, ‘Oh, it is only four years down the track. It is not with us now.’ You do not care about what will happen in four or six years’ time, and, like I said, the end of next term. You have no regard for the amount of time it takes to get approvals, build a power station, get all of this work done, and for the rate the economy is growing. Today I talked about Deloitte Access Economics revising its indicators, because the rate of growth is surprising many people in the Northern Territory, but your only interest is in talking the place down, trying to scare the living daylights out of people and getting in the way. It is time you moved on.
Mr DEPUTY SPEAKER: Member for Wanguri, I am leaving it up to you to bring it back to the subject. Have you finished, member for Nelson?
Ms LAWRIE: It was not on subject, it was a political rant.
Mr WOOD: I thank the minister for the statement about where you finished off last time. So he understands, I am not against reform, but we are going down the wrong path. We could have done it differently and still come up with the same outcome. People would possibly disagree. You said we will save money, because we are in debt. I have suggested a way of saving $7m or $8m by going down this path, instead of the structural breakup into GOCs. I understand that we will probably not agree on that. However in the end ...
Mr TOLLNER: Can I interrupt? There is no $7m or $8m; it is a number which has been plucked out of the ether by members opposite. As I said earlier, my expectation is it will cost somewhere around $2m; the running of a board is a cost to the company, it is not necessarily a cost to government. Implementing changes in IT systems is not a cost to government, it is a cost to the corporation. They are very cute with the way they pull these numbers out of the air. ‘It is going to cost us a bomb’; it is like the Opposition Leader claiming $1bn will go into the network. What a load of codswallop!
Mr WOOD: My figure came from the two graphs Mr Tregilgas provided, and I do not have them in front of me. The figures add up to about $6.8m. We have probably worn it out, but what is highlighted in this debate is that you are asking people to make decisions about reform when we have not had the chance to – we have had a good discussion tonight, but this is something that needed to go to the PAC, which could have investigated some of the things you have talked about, looked at set ups in other states and asked people about the KPMG report, which said, ‘Power is cheaper in Victoria than if it had been under private administration’. I do not know, but some people have said that is not true.
People must either go by faith that what you say is the best way, or we say we have not been given enough information to decide this is the right way for the Northern Territory to go.
We never had enough information to make a proper decision, and that is what has failed in this very important debate. It has been too rushed, and unfortunately the legislation will be passed tonight.
Ms MANISON: I have an operational question about the definitions of the portfolio and shareholding ministers. The Chief Minister appoints the shareholding and portfolio ministers; I am keen to hear the different definitions of those roles, and if they will change from what they currently are.
Mr TOLLNER: No, the roles have not changed, they have been clarified.
Ms MANISON: Thank you.
Clauses 1 to 11, by leave, taken together and agreed to.
Mr CHAIR: Treasurer, I presume you have amendment 18.1?
Mr TOLLNER: Yes. I move amendment 18.1.
Mr CHAIR: The amendment says:
- Clause 12, proposed section 19A(2)(a) and (b)
omit 17(1)(a)
insert 17(1)(b)
Mr TOLLNER: That is correct.
Amendment agreed to.
Clause 12, as amended, agreed to.
Clauses 13 to 19, by leave, taken together and agreed to.
Clause 20:
Ms MANISON: I have some questions in relation to clause 20.
Mr CHAIR: Is the question about the amendment or the clause?
Ms MANISON: We have a range of sections there. Looking at division four, ‘Correction Orders’, and the section that is inserted, for example:
(2) The Minister may, by Gazette notice, make a correction order to rectify the error.
And so forth; where do you see this type of situation occurring, and is this normal to have corrections made by Gazette in these types of situations when errors occur?
Mr TOLLNER: I am informed it is so if there is a mistake in drafting we can fix it.
Ms MANISON: Going to proposed section 53T, ‘Ministerial directions’, it says that:
- (1) The shareholding Minister for a government owned corporation may, in writing, direct the Government owned corporation to do anything that the Minister considers necessary or convenient to be done for the purpose of:
(a) facilitating the making of transfer regulations; or
(b) preparing for the transfer of business that is effected by the transfer regulations; or
(c) giving effect to the transfer of business.
- (2) The direction may require the Government owned corporation to do something that it could not otherwise lawfully do.
Mr TOLLNER: Yes, it may well be in transfers like the disposal of an asset or something like that.
Ms MANISON: Are there any other types of legislation where a minister can direct a government owned corporation or a government owned body to do something that is not lawful?
Mr TOLLNER: That is not quite true.
Ms MANISON: It is a big question, I am sorry.
Mr TOLLNER: It only applies in respect to transfer regulations.
Ms MANISON: Would it not be dangerous and unaccountable to compel a government owned corporation to accept an unlawful decision, particularly given the ministerial direction relates to valuable public assets?
Mr TOLLNER: Any direction I give to the Power and Water Corporation or any of these corporations must be tabled in parliament. If I give a direction to say, ‘You can transfer that’, it must be tabled. This makes transfers lawful; they would have to be tabled in this place.
Ms MANISON: Would you not accept there is clearly some risk in telling a government owned corporation, as the shareholding minister, to do something that is unlawful?
Mr TOLLNER: Government owned corporations have a very narrow charter. If a transfer is to take place that is outside of that charter, it may not necessarily be lawful. This rectifies that and allows those transfers to occur. When that does happen the parliament has to be notified of that and informed of that transfer.
Ms MANISON: Are there any specific examples where this would occur?
Mr TOLLNER: I cannot think of any off the top of my head, but if you want me to take that on notice I am more than happy to.
Ms MANISON: I am thinking it has been drafted for a purpose, so surely there are scenarios where we feel this would occur.
Mr TOLLNER: Yes, as I said we wanted to allow some flexibility in the system to allow us to make sure these separations occur in a timely manner.
Ms MANISON: Could the unlawful direction authorise a transfer of an asset to a private company?
Mr TOLLNER: No, not at all.
Ms MANISON: Can we put it on notice that you are able to give us some examples of scenarios where this part of the legislation has been drafted to give you that flexibility?
Mr TOLLNER: Yes, we should be able to do that for you. It might not happen tonight, but we certainly can.
I move amendment 18.2.
Amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 agreed to.
Clause 22:
Mr TOLLNER: I move amendments 18.3 and 18.4.
Amendments agreed to.
Clause 22, as amended, agreed to.
Remainder of the bill, by leave, taken as a whole and agreed to.
Bill reported; report adopted.
Mr TOLLNER (Treasurer): Madam Speaker, I move that the bill be now read a third time.
The Assembly divided:
- Ayes 12 Noes 11
Mr Barrett Ms Anderson
Mr Chandler Mr Gunner
Mr Conlan Mr Kurrupuwu
Mr Elferink Ms Lawrie
Ms Finocchiaro Ms Lee
Mr Giles Mr McCarthy
Mr Higgins Ms Manison
Mrs Lambley Mr Vatskalis
Mrs Price Mr Vowles
Mr Styles Ms Walker
Mr Tollner Mr Wood
Mr Westra van Holthe
POWER GENERATION CORPORATION BILL
(Serial 64)
Continued from 13 February 2014.
Ms MANISON: Madam Speaker, I will respond to the government’s move to split the Power and Water Corporation, pull the existing generation business unit out of Power and Water and create the new Power Generation Corporation.
I will say up-front again that the opposition will not be supporting this bill. This bill, as part of this suite of legislation, will have an impact on every Territorian. We all pay Power and Water bills and we all need electricity. This bill seeks to separate generation and make it a stand-alone government owned corporation operating independently in generating power and selling it to separate retail providers.
The government says the intent of this is to open up the Territory to alternative generation companies which will set up new power stations and generators, and to ultimately bring competition into the market to give people more options so they can have power delivered to their homes or business at a cheaper price. However, it would be utterly naive to accept the government is telling the full story or that this is the real intent of the bill before parliament.
It is a shame the government did not come clean with Territorians during the 2012 election campaign to tell them this was the path it was going to take with public utilities.
Since taking the reins of the Territory in August 2012, the CLP has been on a rampage with Power and Water, and we have seen staff, management and boards put through hell. They have faced the government’s continual mantra of trashing Power and Water and the professionals who work there, with the Treasurer often calling the corporation a ‘basket case’, ‘inefficient and bloated’ and a ‘dog’s breakfast’. More recently we saw the Treasurer attack Power and Water staff after the Utilities Commissioner handed down his report on the catastrophic March 2014 outage. The Treasurer again demonstrated his lack of respect and understanding around the complexities and challenges in the jobs Power and Water staff face every day.
The Treasurer has also made it abundantly clear he believes there are too many staff working at Power and Water and that they have far too much equipment than they need to do their jobs.
We now have these bills before the House, pushing through the breakup of the Power and Water Corporation in preparation for what will be asset sales, and there has been no consultation with Territorians on the future of the utilities. The public has not been asked what it thinks about the structural separation of the utilities and assets, and what appears to be a very clear determination of the CLP government to go down the path of privatisation.
During the February sittings the Leader of the Opposition moved a motion that the bills be referred to a parliamentary committee to facilitate public consultation and to obtain expert advice on the proposed split. Given this bill, along with the other two, impacts upon billions of dollars of infrastructure, and power prices affect everyone, you would think the government would lay some evidence before Territorians to justify what is proposed. Predictably, at the time the Treasurer declined to support this motion, and it was only an opportunity to do with numbers and complete chaos within the CLP which allowed some very short scrutiny to recently take place, looking at these bills through the Public Accounts Committee. Although this process has been grossly rushed we at least had the chance to ask some questions. Had it not been for the Blain by-election and the government’s inability to put these Power and Water bills through at the last sittings due to its lack of numbers and complete internal chaos, this issue and these bills would have already been done and dusted with next to no scrutiny.
One reason the CLP is keen to push these bills through with little scrutiny is because of the privatisation agenda which underpins them. The government, particularly the Treasurer, seem to have changed their tone over time with regard to their plans for Power and Water and the pathway to privatisation. It is crystal clear that this government, in line with its philosophical desire to sell what it can, has a preference to privatise elements of Power and Water.
This is true of generation, which is why we see this structural separation bill and the suite of bills before us today. In this Chamber over time the Treasurer seems to be coming clean about what he intends to do to Power and Water.
In this Chamber in December, the Treasurer said:
- We are on record saying we are not interested in privatising any Power and Water Corporation assets this term. We would not do so without a mandate of the people, and we are not seeking such a mandate.
On 11 February, when asked important questions by the member for Nelson about the future of Power and Water, the Treasurer said:
- It is a good question about the privatisation of assets, because this is something that we do need to think about in the future.
He went on to say:
- We should not be ruling out the sale of assets …
We have now seen the Treasurer sign up with his mates in Canberra, particularly Treasurer Joe Hockey, around his desire to see currently state-owned assets sold across the nation. The Chief Minister, in Saturday’s paper, was open about signing up to that at COAG last week.
In the NT News, he said:
- There are clearly no plans to sell any part of Power and Water at this stage.
We were not able, through those discussions, to discover which companies they were and the nature of those conversations. It would be nice to get a bit of detail around that, particularly to do with generation. The three bills introduced by the Treasurer to split up the Power and Water Corporation will put more pressure on Territory families and businesses. The government’s plans for the corporation, which depend on the passage of these bills – we have already seen the main one go through and these other ones certainly look like they will as well – will simply compound the pain already inflicted on Territorians by the CLP. The disaggregation and subsequent privatisation of the corporation will inevitably increase tariffs, reduce reliability and cost jobs. The structural separation is a thinly veiled plan towards privatising our Generation Corporation and selling generation assets, currently in the hands of Territorians.
Academics and research across the nation have pointed to this being the case. In an ABC interview with Vicki Kerrigan on 13 February, the University of Wollongong’s academic Professor Sharon Beder said, ‘What happens is that governments split up power organisations before they privatise them and governments are notoriously reluctant to admit that they are going to privatise because it is very unpopular because everywhere around the world where electricity has been privatised, prices have gone up, reliability has gone down’.
She also said, ‘But what happens is that competition leads to private companies cutting costs. This is what they call efficiency and this means cutting jobs which means less maintenance, less training for the workforce, more casualisation of the workforce and this leads to a loss of reliability of services and we are talking about an essential service here, which means more black outs which causes all sorts of problems. Accidental fires because things are not maintained properly and then when you get to the retail end of the competition of it, the competition does not actually lead to lower power prices.’
Power prices will not be cheaper under structural separation or eventual privatisation. This has been the experience elsewhere in Australia where publicly-owned electricity utilities have been split up and then privatised. Earlier this year in the NT News we also saw comments from a professor of Economics, Bill Mitchell, from the Charles Darwin
University. He said:
- The case has not been made that it’s better for consumers. Normally when governments around the world have been setting up to privatise, they go through a de-bundling stage so they segment units into bits they think they can politically privatise and which can be attractive …
Anyone who knows anything about the Victorian retail market knows it’s become an absolute mess. What they’re saying is that the force of the competition will reduce the prices and provide better service … prices aren’t lower and it’s a confused system …
All of us as members of this Assembly encounter the struggles our constituents face, as well as the sacrifices and cuts they have had to make to pay power bills which have skyrocketed under the CLP government. If this bill passes today – it clearly will, as part of three bills before the Assembly – there will be more cost of living pressures and more pain for Territory consumers.
What I have also found staggering and alarming about the government’s plans for splitting the Power and Water Corporation is that it has shown no evidence to justify heading down this path. It was clear through the Public Accounts Committee process that no one could provide any evidence, cost-benefit or risk analysis of work done by government to show benefits which would flow on to Territorians from the structural separation. This appears to be ideologically driven by the government, with little work behind it to crunch the numbers to back it up. The government is playing with billions of dollars of infrastructure and has no evidence to show that this will deliver a better return for Territory taxpayers.
One also has to question what benefits structural separation will bring to the reliability of power for Territorians. After the catastrophic outage of 12 March the government tried to use it as an opportunity to promote its agenda to split the utilities. Given the fault occurred within the system controller networks which flowed on to power stations, the situation would still occur even with private operators in the market. Everyone would still have been left in the dark. The solution is not more generators but adequate investment to maintain and upgrade the systems network to cope with increasing demand in a growing economy, and investment in training and supporting staff to perform their highly specialised and complex jobs to the best of their ability.
To meet the demands of a growing Territory population and position ourselves to make the most of opportunities driven by economic growth, there has been significant investment in generation assets across the Territory in recent years. New power stations have been built at Weddell in the Top End and Owen Springs in Alice Springs. Top notch new power stations have been built and invested in to meet our future power needs, and as we just heard during debate, the Utilities Commission report said we have sufficient power capacity until about 2018-19.
We have seen significant investment in new generation sets at Channel Island, Katherine and Tennant Creek. Given the Treasurer’s admission in February when he said the sale of assets should be looked at, are these some of the assets which will be sold as part of the government’s privatisation agenda for Power and Water, and the new Generation Corporation this bill seeks to establish? It is a critical point in this debate which members must consider. Once those assets are sold, Territorians will not get them back. The investment will be gone and in the hands of a private operator. We will lose our assets and the investment we have made.
At the Public Accounts Committee hearing we also heard from QEnergy, a retailer, that purchasing older generation stock has been attractive in other places as a way of companies getting into the market, so to speak. Given amendments to the Government Owned Corporations Act will open the new Generation Corporation to having its assets transferred by regulations at the hands of the shareholding minister, one must ask what will happen to generators currently owned by the Territory.
The shareholding minister has some hefty powers by regulation to transfer assets of the new Generation Corporation as he sees fit, as we heard during the previous debate. If the sole purpose of establishing the government owned corporation was to transfer assets and liabilities appropriately amongst them, why has the government broadened the ability to transfer assets beyond that, between government owned corporations? Instead, the Treasurer has broadened his ability to transfer assets to subsidiaries, statutory corporations, corporations, body corporates and the Territory.
The government seems to be keeping its options wide open here, and the minister said during the previous debate that he was very keen to be as flexible as possible.
The government has made these changes because they are part of its plan to offload generation assets into the future and use it as a cash cow. As we discussed before, the government has signed up with its mates in Canberra to effectively encourage the sale of publicly-owned state assets. We heard about TIO earlier today, and we also heard during the previous debate that there is an ability to offload assets within the Power and Water Corporation and the new government owned corporations being established today. This legislation plays right into the hands of that agenda. Asset sales are clearly on the agenda of this government and it has signed up to it.
I am worried about the future and what it holds for staff in generation who will be transferred to the new GenCorp. They are told at this point that it is business as usual and it should not be a great change for them.
I note in the Treasurer’s second reading speech he mentioned the rights of corporation employees who will be transferred between the three corporations established under this bill. What the future holds is a great concern for Power and Water Corporation employees. Understandably, apprehension is based on previous sackings of experienced and competent employees, and constant attacks on corporation staff by the Treasurer. What will happen to staff as a result of decisions made by new boards with regard to the operation of GenCorp? Current employment conditions will remain in place until 2015, but what happens to new employees when that expires?
We have seen in other jurisdictions that when structural separation occurs and utilities move towards privatisation, staff do not benefit. Management levels tend to grow, while numbers on the ground at power stations and in control rooms reduce. Fewer staff means more work for those left and less capacity to do necessary jobs, including maintenance. This puts staff safety further at risk.
Through the Public Accounts Committee we were able to confirm there are presently 150 full-time staff in generation. I also asked for some organisation charts as part of the process, which Power and Water provided to the committee. I seek leave to table the GenCorp organisation chart as at 1 July 2014.
Leave granted.
Ms MANISON: This in an organisation chart for changes in GenCorp as at 1 July. It is important to get it on the record so we can monitor and track what changes happen into the future and whether these see a reduction in the workforce.
We also know fewer staff means less reliable services. It is important the new corporation continues to invest in staff and their training and professional development. They do highly specialised jobs which can be quite dangerous. One only has to go through an induction and a walk through the Ron Goodin or Channel Island Power Stations to see conditions on the floor in those jobs and that they are not easy or straightforward. Working in generation is a tough job and there are workplace dangers we cannot appreciate as we sit here in the air-conditioned Chamber and our offices. They work with heavy machinery and electrical equipment, and it is a job with more dangers than most.
The job security and staff of Power and Water must not be compromised by structural separation. I fear for them when the Treasurer has openly said he thinks there are too many of them; he expects there will be staff reductions as a result of structural separation and he thinks they have far more equipment than they need to do their job.
The government, particularly the Treasurer, has held little back in its efforts to trash the professional reputation and integrity of staff within Power and Water. They have been called a number of things by this government, and I again remind the Treasurer of the descriptions he likes to use – ‘inefficient and bloated’, a ‘basket case’ and a ‘dog’s breakfast’.
Highly-respected, knowledgeable, expert senior managers have been sacked or moved to other places. Their highly-respected board was sacked. Highly-respected members of the handpicked board have resigned. Staff morale at Power and Water is currently at an all-time low. People are uncertain about their future and do not believe this government appreciates their hard work. I hope the government shows them the respect they deserve through this process; however, I am not too optimistic on that front.
I also note the cost of structural separation – there have been many questions around – and how much this has been attributable to the Generation Corporation and whether there will be gains made from this expenditure. With regard to the cost implications of separation there will be the following: legal costs to establish the three new corporations; the cost of developing contractual arrangements between the new corporations; operational costs for additional boards; ongoing additional executive management expenditure, including salaries for new CEOs and Chief Financial Officers; ongoing annual costs of establishing separate support functions and systems; rebranding for the new Generation Corporation; and new systems and other infrastructure.
During the Public Accounts Committee hearing we heard there are estimates in place, but these are still to be reviewed after this legislation goes through. Section eight of the NewCo Project Governance document sets out budget development principles which strive to have the budget established by best case scenarios. That is how it has all been budgeted. At this stage NewCo is talking about $6.8m for 2013-14 and 2014-15, while for the Power and Water Corporation the Public Accounts Committee said the other day that figures for 2013-14 alone had equated to $2.2m spending on structural separation.
We have also been told that after this legislation passes those estimates provided to the Public Accounts Committee will be reviewed again, so this is clearly not the last we will hear of those figures and where they will land. We know from NewCo’s governance document that the Treasurer will have to personally sign off on every dollar readjusted in the budget to separate Power and Water, so it will be interesting to see what is signed off between now and estimates. We will be asking many questions throughout the estimates process about where those costs have landed. We all know the budget expenses the government has been paying for, such as the services of commercial lawyers and the drafting of legislation within the Government Owned Corporations Act and for advice on separation. It is clear it is putting mechanisms in place to offload the Generation Corporation, that is, to offload assets when it sees the time is right.
The government has had to shuffle tables and chairs in the Mitchell Centre to make room for a myriad of consultants and advisors working on the split and, ultimately, the privatisation of the corporation. Beyond the January 1 start time of NewCo we have heard little about some of the costs accumulated well before that. The policy intent of these bills is deeply flawed and flies in the face of experiences elsewhere in Australia. We have seen a very rushed process, with no evidence, numbers, data or analysis to back it up. This is being rammed through by the government with no evidence, proof or analysis of what impact this will have on the price of power in the Territory.
The disaggregation and privatisation of electricity utilities drives up prices for consumers, reduces reliability of supply and costs jobs, particularly those of blue collar workers. The Treasurer’s conservative colleagues interstate are re-amalgamating their generation corporations with retailers because splitting them up has not worked.
If disaggregated electricity utilities do not work in markets with millions of consumers, how will they work in a small market like the Territory? On the issue of the corporatisation and privatisation of electricity utilities, Professor John Quiggin, Australian Laureate Fellow at the University of Queensland, said this:
- After 20 years it is evident to everyone that the electricity reform program that began in the early 1990s has not delivered the promised outcomes. Privatisation, corporatisation and the creation of electricity markets were supposed to give consumers lower prices and more choice, to promote efficiency and the reliability in the electricity network and to drive better investment decisions for new generation and improved transmission and distribution networks.
None of these promises have been delivered. Prices have risen dramatically … privatisation has produced no benefits to consumers, but has resulted in large fiscal losses to the public.
I urge members opposite to carefully consider this bill and what it will mean for their constituents. No matter where they live, in a remote community, the towns or urban centres, Territorians will suffer under further price increases.
The people we all represent have already shouldered the burden of huge power increases, and we are following the Treasurer down this path.
I urge members not to believe the spin of the Treasurer, and take note of the continually shifting goalposts when talking about Power and Water.
Structural separation sets up the sale of assets which belong to Territorians. It will compromise the essential service Power and Water is, and make it into a profit-driven machine.
We oppose the bill to establish the Power and Water Generation Corporation, as well as the other two bills before this parliament, in the strongest terms, and I urge all members to carefully consider them and the impacts they will have on constituents. Thank you.
Mr ELFERINK (Attorney-General and Justice): Madam Speaker, I will not be on my feet long, because I am aware of the time. However, I will point something out; I noted the member for Wanguri started quoting Bill Mitchell, the economist at CDU. She then talked about ideological pursuits and those sorts of things. I refer to the Wikipedia entry on Bill Mitchell, the CDU economics professor; I will quote from that entry, which I presume is from his university bio. It says:
- Mitchell is active in the public opposition of neo-liberal economic theories and practices and disputes the ‘revisionism’ of history ostensibly perpetrated by mainstream or conservative economists, especially in relation to the policies of the New Deal.
It goes on; he clearly has an axe to grind from an ideological point of view. To rely on Bill Mitchell to support your arguments is to rely, if you like, on the works of Karl Marx to support your arguments. I do not use the term lightly, but in a seminal work by Bill Mitchell on his blog site – he has a blog entitled ‘We need to read Karl Marx’. Karl Marx was not who you would call a right-wing figure in economic history.
I am always interested when I hear members from the other side quoting people, because when you look them up, the people they are relying on are not slightly left; we are talking about people who have an axe to grind, which is more ideologically bound than many of the unions we have to deal with from time to time in EBA negotiations.
I will also quote from Bill Mitchell’s blog, where he says:
- It is clear that capitalism has reached a crisis point after three decades of deregulation, privatisation, welfare cuts, etcetera were argued would optimise its performance. It was clear that all this neo-liberal legislation did was to push more power to capital, redistribute real income away from the workers, and reduce the political capacity of governments to fiscal policy and regulation to mediate the class struggle and sustain full employment.
Capital has never liked full employment. Marx knew that. The last thirty years or so has seen gains made by the workers and their unions over a century of struggle eroded away by the relentless attack on their rights and conditions. The class struggle is alive and dominant in this crisis.
She then accuses us of having an ideological axe to grind. If there was anybody with an ideological axe to grind it would be a person quoting Karl Marx at length to support their world view.
Whether the member for Wanguri realises it or not, Marx is dead. He died over 100 years ago, and the legacy he left the 20th century because of people trying to adhere to his world view was one of pain and anguish that went on and on, and you heard this sort of thinking weave its way into the member for Wanguri’s contribution tonight. It is about protecting the jobs of the workers who work in the Power and Water Corporation. It is about making sure those jobs are protected. At what cost? Who pays for that?
The problem is the longer you try to forestall an economic tide or push, the greater the agony when the dam bursts. That is the lesson learnt in Portugal, Italy, Ireland, Greece and Spain. Those countries have discovered the joy of trying to push pain back, because if you try to avoid a little pain now and do it an artificial way, which is still argued by people like Bill Mitchell, when the correction comes it is a crass, gross and substantial one. Part of the reason there is an element of pain identified by members opposite in this debate is because we are now the last ones to go down this path. It has worked and continues to work in other jurisdictions. Yes, it gets tweaked in other jurisdictions, but we have not moved on as the rest of this country has.
This will not be the panacea for all difficulties faced by people using the Power and Water product, certainly in the electricity domain. I do not believe it is intended to be the panacea to fix everybody’s problems. This will not provide free electricity; nobody is promising that. What it will do is restrain price growth and moderate the problems which must be dealt with at some point in the not so distant future, and that will lessen the effects of the correction when it comes.
This is a matter of foresight, predictability, and is not in pursuit of policies advocated by Bill Mitchell when he talks about the activist role of government to support jobs. Bill Mitchell’s seminal work talks about full employment, and then describes an activist role of government to bring about full employment. It was recently tried in Greece, Spain and a number of other countries, and they have now been served the credit card bill.
It is the definition of members opposite that they believe the credit card is a way to govern. If productivity does not match spending, that value must come from another place, and that comes in the form of borrowings. When you go down that path there is a bill to be paid at the end, and that is what we have been struggling with since coming to government. We continue to struggle with it now, and the last thing I want to hear in this Chamber is Labor Party members telling us we should fall lock step in cahoots with an economist who believes Karl Marx needs to be revisited and adopted as a way of governing the economic future of the Northern Territory.
I disagree with Bill Mitchell’s world view. Those things are archaic and essentially dangerous in the long term. I am disappointed the member for Wanguri’s arguments are heavily weighted around the opinion of an economist opinion who believes Karl Marx deserves another visit. I do not agree.
Mr McCARTHY (Barkly): Madam Speaker, so sayeth the member for Port Darwin, who has not told the House how many Territory workers will lose their jobs. Those with a poster of Karl Marx on their wall will preferably be the first to go.
Let us talk facts about why there has not been any real analysis around this subject. We have heard from numerous speakers who wanted to look at an analysis and an evidence-based approach, but it has not come. We have talked about the possibility this would have already been rammed through, only you guys had a mass meltdown because you could not all be in the same room together. This government is undertaking major economic reform, and its members walked out. One was on leave, one was absent on duty, you had to push it out and we heard, ‘Just trust me’. How many jobs will be lost? Let us hear the minister tell us how many jobs will be lost. How many Territory workers will lose their job and go onto Newstart? That will be okay, won’t it? It will push them over to the responsibility of the Commonwealth government. We are not hearing anything about this, and the member for Port Darwin comes from the big end of town. I come from Tennant Creek; tell me what will happen to power generation there.
I will tell you what certain people say about that. A Power and Water document called the ‘Responses for Tabling’, from the Committee on the Northern Territory’s Energy Future public hearing on 20 March 2014 says, in relation to this new company which will be set up – it is on its paper which was tabled in relation to smaller power systems:
- The Review is contradictory on the suitability of the proposed arrangements for smaller systems. It is unclear whether customers in Alice Springs and Tennant Creek will benefit from these arrangements.
Not only Tennant Creek, but Alice Springs gets a mention. I would consider it to be a big customer base, but not in this model. This has come directly from the Power and Water Corporation, which responded to the committee’s questioning, an avenue we wanted to go down.
We also wanted the Public Accounts Committee to do the analysis around this, but once the numbers for Blain came in – it was a 10% swing by the way, but nobody wants to talk about that on the other side because many of these marginal seats are less than 10%, and there are two right in front of me. Anyway, we will not talk about that. You got your number, you are a 13-12 game, and soon as that 13 came into play nobody wanted to revisit the Public Accounts Committee. It was a sad con job because I witnessed the CLP, in opposition, attack the member for Nelson, and it then came into government.
I thought these people with half a brain would leave him alone, but their egos got in the way. They tripped over their egos and started to attack the member for Nelson from a government bench. I found that disgraceful, yet only a month ago, when the desperados were in a minority situation, who did they start to suck up to? The member for Nelson; he is a good bloke and he does it, as the member for Port Darwin says, in the interests of the good folk of the Northern Territory. He got that motion through, and it was self-referred to the Public Accounts Committee. What happened after Blain? ‘Wipe it, we will be on our merry way.’
Anyway, let us get back to the important part of the debate, that being the Treasurer’s response in telling constituents in Tennant Creek and Alice Springs how this will affect them. We will go a bit deeper, shall we, ladies and gentlemen? Let us talk about Yulara, Borroloola, Ti Tree, Timber Creek, Kings Canyon, Daly Waters and Elliott. Let us talk about how the Power Generation Corporation will make sure those customers are looked after appropriately.
In September last year, when questioned by the NT News about the split, the Treasurer said:
- We’ve been talking to a number of companies about investing in the NT and a number of companies have expressed an interest.
Treasurer, in the interest of open and accountable government, and in closing this debate tonight, can you tell Territorians who you have been talking to, what you have been talking about and how this new system will deliver cheaper power for them? Which Territorians? Those who live where? How will it deliver the same benefits for those people in regional and remote jurisdictions? We would like to know, Treasurer, who you have been talking to. Who is on the blocks to come to the Northern Territory and take up position in a very lucrative customer base? As the Treasurer said in the previous debate, he has now set the ground rules for these changes, and the Territory economy is booming. The Leader of the Opposition challenged him with the word he cannot quite articulate – the Icthys project – and I will add the Marine Supply Base and Darwin Correctional Precinct to that. They are all projects which were bagged out.
One thousand jobs: we had to create a major intersection on the Stuart Highway to simply manage the traffic going in and out of that area now. I agree with the Treasurer that the economy is booming, and it all happened in the last 18 months, yes? That is right, we will have them believing their own rhetoric. The customer base is there, but what about the rest of the Territory? Once again, we get into the debate; please explain to me that the cash cow of the current Power and Water Corporation, which is generation – and we will get to retail directly – will start to be stripped down and broken up. These new associates of yours who are coming across the border to do business in the big end of town will no doubt severely impact on the Power and Water Corporation’s bottom line. It is an income bottom line, and it will be the entity left to look after the rest of the Territory, the places where I live and the people I represent. How will that happen? How can we be sure it will all go to plan, or will it be another, ‘Just trust me’? We will wait and see. The Treasurer could put all of this to rest by telling us about the good companies coming across the border that he has already been talking to, how they will change the game, how the original Power and Water Corporation will survive being left with the poor cousins across the Northern Territory which need subsidies, and how the Indigenous Essential Services system will be maintained, as he keeps alluding to and is definitive about when wound up.
I ask about the consolidated and general revenue of the Northern Territory government and how they will support that. When the Power and Water Corporation is in the new era of a very reduced revenue bottom line, how will it fund the innovation we need in the bush?
I agree with you, Treasurer, that it is a good plan across the Northern Territory and a very opportunistic situation, because renewable energies and alternative energy sources can be a big part of the CLP’s Framing the Future plan. That can be a future economic driver for the Northern Territory. The Power and Water Corporation will be given responsibility to go into the regions and remote areas and do that business, while these other companies coming across the border in the big end of town will be spinning out power as fast as they can produce it. How will that balance take place, Treasurer? I am very interested in how you will deliver what is a good, innovative policy relating to all of those renewable energy opportunities across the Territory, reducing the bill for diesel.
Under current arrangements we saw three hybrid power stations delivered under the previous government into remote areas. These are not only great data research stations which will inform good policy about renewables into the future, but also good outcomes in reducing the diesel fuel and the carbon footprint. How will that continue into the future? When will the next three hybrid stations be delivered by the Power and Water Corporation into regional and remote communities when their income bottom line will be severely affected by this new system which will definitely flourish in the Darwin and Palmerston areas? These are a few questions I have, and I ask these questions on behalf of many constituents who have been having the conversation around their situation.
This can be summed up, essentially, with a very short paragraph: Treasurer, can you ultimately guarantee the uniform tariff will be maintained? Profit will drive the operations of private sector companies who enter the NT market, and will be well and truly located north of the Howard Springs line.
That, essentially, is the question coming from the regions and the bush. It is also associated with the Indigenous Essential Services budget, and we are not sure about those answers. You seem very confident everything will be okay – ‘Just trust me’. However, they are serious questions coming from Territorians concerned that this is major economic reform.
As the member for Port Darwin likes to stereotype the socialists, I will stereotype him with major Liberal economic rationalist policy, the market-driven economy. However, I have lived in New South Wales, I understand Queensland and I have spent time in Victoria and South Australia. I get it in the eastern block, but I do remind the Country Liberal Party about the unique nature and challenges of the Northern Territory. I question whether this will rebound on you very shortly or within the bounds of time, as the Leader of the Opposition said, when the Territory starts to feel the full effects of one-,two-,or three-year costs and any serious challenges around the Power and Water Corporation operating under its new regime.
I look forward to the Treasurer’s responses in his wrap, and maybe I should start to put together 1000 questions for the committee stage. That would be good fun; I am sure everybody would be looking forward to that. Why not? This is important enough and this is the House of debate. We do not have the evidence in front of us; we do not have the cost-benefit analysis and the Public Accounts Committee has been taken out after a 13-12 result in the Blain by-election. We need to leave this House, go back to our electorates and advise constituents that it is okay, just trust the Treasurer and his mates on that side.
Mr STYLES (Transport): Madam Speaker, I was not going to speak, but I have been listening to some of the stuff coming from members opposite.
I made a couple of notes earlier, in case I felt the urge to speak on behalf of my constituents. The Leader of the Opposition earlier talked about economic credibility. I will refer to a graph of the non-financial public sector debt, and for those who are viewing this debate, I ask you to note the left hand side, which shows when the former Country Liberal Party was in government until 2001. You will see, moving along the timeline, that the ALP comes in and the debt goes up. The GST cash truck turns up from Canberra, it drops a bit and the current Leader of the Opposition then takes over as Treasurer of the ALP Northern Territory government. We then look at the start of a pyramid being built; for those watching you can see it goes up on a 45 degree angle to a projected debt of $5.5bn.
The Leader of the Opposition is the architect of that debt, and she talked about economic credibility. It is interesting because I get around to my shopping centres every Saturday morning; we go there and I talk and listen to people about a range of things. That is one aspect, whilst the other is my family and my children’s friends; I go to barbecues with the family, and there are people with little kids there. They talk about the debt and their kids’ debt – they are my grandchildren – and how long we will be paying off the spending of the architect of what is now a horrific debt to income ratio, the current Leader of the Opposition and then Treasurer.
The COAG agreement, as we heard the Chief Minister talk about from when he was at the meeting last week, was signed in relation to Power and Water, and the Chief Minister had the support of everyone at that meeting. It was a unanimous decision to support what the Northern Territory government is doing with Power and Water.
I note that around this country there are two Labor governments as part of COAG which have endorsed what we are doing here. I ask the Leader of the Opposition if she is out of step with what the rest of the country is doing and her own side of politics.
Reform within the electricity network has been going in this country for 15 to 20 years. The member for Casuarina talked about the WA government privatising things, because he was defending the fact Labor governments have privatised assets as well. My information is that the WA Labor government, when it privatised power and water, did not adopt the National Energy Market rules. It had a different system and went out on its own. My understanding is it did not make a very good job of it.
I look at that example, as well as others around the country. Who privatised power services in other states? It was Labor. Labor led the charge of privatisation. It also floated the dollar, and if the member for Casuarina’s information is correct, it privatised the Commonwealth Bank as well, where it made many changes. I also recall that happening.
Labor governments around the country have done exactly what we are doing. For the sake of argument you might say we are following Labor’s lead, yet we have an opposition here, a part of the Australian Labor Party, saying ‘Oh, no, you cannot do this’. We are the only jurisdiction in this country still to adopt National Energy Market rules and take up the option of bringing efficiencies into the system.
The member for Port Darwin talked about someone taking some pain. We must have this discussion and we may have to go through some of those painful things to get some competition into the marketplace.
With the ‘developing the north’ policy the federal government has adopted, as well as those undertaken by the Territory government, we will have increased activity here. It is coming, and you have to plan to be part of it. Planning to be part of it is about having competitive industries and competitive supplies within the Northern Territory.
If you have a monopoly things do not happen. I have said this before in this House, but when I first came here I think calls to southern states cost probably about 10 times more than they are now. If you extrapolate it out, a call to Perth, where my mother and father lived, would cost an arm and a leg these days, but it does not. Governments of the day saw benefits in introducing competition, and it has driven down the price of telecommunications.
People were saying, ‘Oh, this will be terrible. You will introduce this and what is going to happen? We are selling off Telecom’, as it was known in those days. When they started to separate Telecom, we are doing that now – the NBN is coming and there is a range of other providers coming into the marketplace. The necessity to become more innovative and efficient is the mother of all creation. What we have now is other players coming into the electricity market to figure out how they might generate power more cheaply to become more competitive.
Those opposite talk about a range of issues, and say we should be doing this and that. There are people who know more about electricity production than everyone in this room put together, and there are those who will come up with ideas. If it is necessary they will be thinking; they will hold brainstorming sessions. That is how you come up with new innovations. There are things we in this House, and some of the people in the Northern Territory, probably have not even thought of. When it becomes necessary to think about those things, ideas on how to become more efficient and effective will come forward.
In the days of tight budgets, given we have inherited a massive debt and have to manage that – we have a plan to get out of it. There will be some pain, but I do not want to continue on the road the Labor Party was going where I am hocking my grandchildren’s future and where they will be paying off the excesses of a Labor government which ran between 2001 and 2012. I do not want to be known for that, and I know my colleagues do not. When we have wing meetings we talk about what we want to leave the Northern Territory. Do we want to leave it a worse or better place? We want to make it a better place, which is why we are open for business. It is about encouraging innovation, competition and a range of things in mining, oil and gas and agricultural production. We hear things on this side of the House all the time about what we want to do to enhance the Northern Territory. It is not only about what we want to do and what the plan is, but also about executing it.
There are many things going on behind the scenes at the moment, but when you had a style of government which was based on borrowing more money and throwing it at things like fairy dust, things slow down. We have to wind the whole machine up, and we are doing that on this side. The budget the Treasurer will deliver next week, given the horrific debt both we and the federal government are in, courtesy of the Australian Labor Party, will be quite successful. We have a plan to get out of the trouble we have been handed by previous governments, both locally and federally.
I heard the member for Wanguri trying to paint a picture of chaos, disaster and the government being in disarray; there was a bundle of words which I cannot remember exactly. I do not know about that, but we are doing some great things and government is going on, albeit the opposition would like people to think it is in chaos. The only word I did not hear the member Wanguri use was anarchy; she obviously forgot that one and should have thrown it in as well.
Some of the economic and police figures coming out, as well as some of the things we are achieving, speak for themselves. These are not things we pluck out of the sky; these are figures produced by the same public service those opposite had when they were in government.
It demonstrates that this government is achieving in so many different areas. I feel sorry for those opposite. The member for Barkly seems to be a bitter person; he is angry and seems to take it out in this Chamber on anyone on our side of politics and anyone who would dare to disagree with anything he says. It is a shame, but I understand it because when you run the Territory into such a debt, had policies which did not work, and someone then puts out fiscally responsible budgets working on reducing debt so our children’s future is secured, and has some of the results we are seeing come from the same public service those opposite had, I would probably be upset too. They had policies which did not work, and they want us to revisit them.
I find it amazing that if you have something which does not work you would still want to flog it. I think it is called flogging a dead horse, and the opposition is doing that. We on the other side want to fix the horse, pat it, love it, give it a good feed and say, ‘Come with us on a journey, and we will walk together’, because we will make it better for everyone in the Territory.
You hear the Labor Party trying to rewrite history. If I was on that side I would be trying to rewrite history as well, because it is not a very good story they have to tell. We listen to the Leader of the Opposition, and I think she believes that if you say something often enough people will start to believe it is true. That is the theory they operate on. They continually demonstrate that they want to change the history of what occurred in the 11-and-a-bit years they were in government.
That is a sad indictment on what they did in government and what they did not achieve. They are probably angry because we have been in government for 18 months and have been able to turn so many things around, simply because we are a ‘can do’ government. It is about being open for business, and the one thing I hear about is word getting around within the Territory, Australia and overseas that people are aware they have a supportive government which will work with business to generate wealth. There are people who have capital they would like to invest somewhere around the world. By demonstrating we want to become an efficient and effective economy, people will invest in the Territory.
A number of groups have recently been in the Territory with amazing amounts of money to invest. I have heard those groups have somewhere between $500bn and $1 trillion, and are looking for somewhere to park. There are people on this side of the House who have spoken to those people and said, ‘We would like to see you park some of that here’. Those people did not get that money because they waste it by throwing it around like fairy dust. They get it because they are smart people and know exactly what they want to do. They want to invest in a smart economy, and if we continue down the path the former Labor government had us on we will not be a smart economy. It is pretty silly to run up a $5.5bn debt, and there are incredible debt to income ratios which are unsustainable. That is not very smart, and people do not invest in areas where people are not economically responsible.
I go back to the Leader of the Opposition. I found it amazing that she would accuse us of not having any economic credibility. However, I do not know of too many people who turned up here when she was Treasurer with an $800bn bucket of money to say they wanted to invest some in the Territory. I did not see her talking to them to say, ‘Have we got a deal for you’, because they did not turn up. They do now – why? It is because the word is out in the international community that the Territory is a place you can do business, where government will work with you to help generate wealth, and with wealth comes taxes. If you want to change your debt to income ratio, the best way to do that is to generate wealth. If you double your income, you halve your debt to income ratio. You will suddenly look like a viable organisation, and rating agencies will continue with our good rating and not downgrade us, like we were due to be. If the previous government had won the last election we would be paying far more for our borrowings. We would be in serious financial trouble if people had downgraded us, and investors would not be lining up at the door to invest in an economy which was going down. Fortunately we won the last election and have been able to turn it all around.
It comes from reforms, and these are not only our ideas; they are what Australia has done. Those opposite will say this is terrible and the sky is going to fall in. They would like to keep everything as it is, and if they did that we would be going down the gurgler. I am not going to allow that because I am part of a team which will ensure our kids’ future is secured.
What we will see in this Power and Water separation is a more effective organisation, as well as efficiencies. The Utilities Commission, the two Labor states, COAG and the rest of Australia want us to do this, and are supportive of what we are doing. The only people out of step with everything happening in the Territory are the current opposition. I would be ashamed if I was an opposition member; I do not know how they sleep at night, because they do not seem to be worried about my kids or grandkids. I do not know if they are worried about theirs, but if they were they would support what we are doing to create an efficient and effective power supply, as well as all other efficiencies we are trying to build in to the economy so people will come here, invest and create jobs for our kids.
I support this bill, and I encourage all those opposite to look at reform happening around the country and who is supporting it, outside of their little bubble.
Madam Speaker, I commend the bill to the House.
Mr TOLLNER (Treasurer): Madam Speaker, I again thank those who spoke during this debate. I will not speak for long, but I heard a number of people talking about economists and others. While I do not intend to denigrate economists or any of them, I will draw the Chamber’s attention to the booklet, National Electricity Market: A case study in successful microeconomic reform. I draw members’ attention to page 29 where it talks about the US economist Vernon L. Smith, who was commissioned as a consultant advisor to the market simulation program, part of the reforms we are discussing today. He was engaged because he popularised experimental economics, which highlighted the value in trials and experimentation as part of the process of designing a market later in 2002.
Vernon Smith was awarded the Nobel Prize in Economics for having established laboratory experiments as a tool in empirical analysis, especially in the study of alternate market mechanisms. Page 29 says:
We were lucky to engage Vernon before he won the Nobel Prize. After 2002, we may not have been able to afford him. His contribution to the market simulation program was invaluable.
I mention Vernon Smith because he was instrumental in setting up what we now call the National Electricity Market. He provided advice about how we should go about it. He is a well known global economist, and says the wholesale market in Australia has implemented features which make it among the most advanced anywhere from the perspective of reflecting good economic design principles.
The point I make is that for those economists you find who will pour scorn on the National Electricity Market, you will always find others who will laud it and say it is one of the best in the world. That is exactly what we are modelling our system on.
There was plenty of debate on the previous bill. I do not intend to speak any longer, but I do commend this bill to the House.
Motion agreed to; bill read a second time.
Mr TOLLNER (Treasurer)(by leave): Madam Speaker, I move that the bill be now read a third time.
Motion agreed to; bill read a third time.
POWER RETAIL CORPORATION BILL
(Serial 65)
(Serial 65)
Continued from 13 February 2014.
Ms MANISON (Wanguri): Madam Speaker, I respond to the government’s structural separation agenda for the existing Power and Water Corporation with regard to this bill to establish the Power Retail Corporation.
This bill aims to make an existing retail division within Power and Water Corporation a stand-alone government owned corporation responsible for the sale of electricity to households, businesses and big business customers. It will also be responsible for the purchasing of electricity to provide it for sale and supply to its customers. The government says this is in the best interest of Territorians and that they stand to gain from this arrangement as it will encourage competition amongst retailers and generation companies.
However, there is no evidence or case studies which point to any success elsewhere in Australia, with cheaper power bills for consumers. In fact, where competition amongst electricity retailers has been introduced elsewhere, most customers ended up paying more for their power. Even in Western Australia where structural separation was introduced almost 10 years ago, government has now gone about amalgamating its retail and generation arms of business to save costs.
Despite this, the government is determined to go down this path to create the Power Retail Corporation, even though it does not have a shred of evidence that this will mean cheaper power bills and better outcomes for Territorians.
As we heard during the recent Public Accounts Committee hearings, established retailers are already operating in the Territory, and the desire to target Territory consumers is somewhat limited. For example, the Public Accounts Committee heard from QEnergy, and it was clear that small household customers were not on its agenda, as it did not see the right conditions in place to chase them. In fact, QEnergy managing director Kate Farrar said:
- We would like to be able to extend our core business into those small businesses in the Northern Territory. However they are currently significantly subsidised and that subsidy goes to Power and Water Retail and, consequently, we cannot compete with those prices.
In order to have these retailers competing for households, will this mean the government removes subsidies which exist for customers which already help keep prices a bit lower? Will Territory customers have to start paying even more than they already are to encourage more private companies to risk jumping into the Territory and competing in a small market with more limited returns?
Given the views of this already established and highly knowledgeable retailer, you have to wonder. QEnergy also said the price order in place for big businesses to help keep power prices at current rates should not continue in its current form, to help it be more competitive. It means it would like Power and Water to charge big customers more. What will that mean if business passes on power costs to consumers again? Everybody will end up paying more.
Although this bill before the Assembly is only a few pages long, the complexity and impact will be quite large. The bill also drives many questions about which staff will go where, and how structural separation will mean the continued shared use of services and assets between the new Retail Corporation and the Power and Water Corporation.
There are many questions which need to be answered. Most importantly, does the government have any proof this exercise will benefit anyone?
We, as members of parliament, have had little opportunity to scrutinise these bills. We have already gone over, in much detail, the fact there has been limited opportunity through the Public Accounts process, and the fact we are debating this legislation before the Public Accounts Committee process inquiry has finished is not ideal.
For all of the promises in the southern states regarding more competitive pricing of electricity for the consumer with competition and privatisation, it simply did not deliver. People are paying more for power than ever before. As for arguments from government that it is everyday household customers who will benefit from this bill to separate the retail arm, the reality is it will not be the family of four sitting in their home in Wanguri who competitors will be after, nor the couple living in a unit in Stuart Park and it will not be the everyday residential consumers in Darwin, Katherine, Alice Springs and Tennant Creek who companies chase. Competitors are chasing the big customers; they are after the big buyers of electricity. They will be knocking down the doors of organisations with big power bills and big budgets.
The stark reality is it will not drive down the cost of electricity for households which have already been slugged with a 25% increase, with another 5% on the way next year. Despite what we have heard about no further increases, the network price determination has now been released. It is about 30% and we are yet to find out details of who will foot that bill.
At present the Power and Water Corporation includes the business division of retail, which employs staff tasked with a range of jobs. It is a highly specialised and professional team, which is often forgotten in the context of Power and Water, despite the fact they are on the front line with customers every day. They manage billing, connections and disconnections; they are on the phone to customers and we see them at the retail counters. They have a tough job, and it has become tougher under the CLP and the massive price hikes it has driven. It is retail staff on the front line who have been dealing with customers outraged at their increased bills because of the government’s 25% increase to power. It was retail staff who copped abuse when people started getting their power bills and the massive increases first came through for power, water and sewerage. It was retail staff who also copped the fury regarding recent catastrophic outages and people seeking compensation who were very confused due to mixed messages from government.
The retail team has had a very tough trot under the CLP. They have no easy job as it is, and this split has left them with further uncertainty about their role in the future. This bill makes the role of retail staff even more confusing.
At present there are 78 full-time staff working for retail within the Power and Water Corporation. I seek leave to table the proposed new organisation charts for the retail corporation.
Leave granted.
Ms MANISON: It is important we put those on the record today so we can show what Power and Water looks like at the start of this structural separation and see down the line whether or not this activity has been driven by looking to reduce staff numbers in the Power Retail Corporation.
We know the Power and Water Corporation and the Power Retail Corporation have a day X in mind where they seek to achieve total structural separation. It will be interesting to see what the organisation looks like on that day and whether or not it has delivered what the government has planned.
In the Treasurer’s second reading speech for the bills of structural separation he said:
- The Power Retail Corporation will take responsibility for all aspects of the power retail relationship with contracted, contestable customers on the day of its operational commencement. For residential and business customers still subject to the government’s pricing order, and those customers nominated to be on ‘legacy contracts’, all bills issued to such customers will continue to be prepared and branded by the Power and Water Corporation for a period of time.
Enabling competition …
Further, in the Department of Treasury and Finance’s Northern Territory electricity market reform information paper of February 2014 it says:
- i. with regard to residential and business customers still subject to the Government’s pricing order, and those customers nominated to be on ‘legacy contracts’, all bills issued to such customers will continue to be prepared and branded by the monopoly GOC provided under the Transitional Service Agreement; and
j. initially, the Power Retail GOC will be subject to sharing of corporate systems with the monopoly GOC provided under transitional service agreements.
We have been told everything has been sorted, systems are ready to go, there is no confusion to be had and this can all be accounted for separately in the true spirit of accounting transparency that so much of this bill and split is about.
When there is a catastrophic power outage, like we saw in March in the Top End, where do customers go to get answers? If people are seeking compensation for their appliances blowing up as a result of an outage, who can they speak to if it is a network fault, for example? If the problem was caused by the new generation competitor, who cops the blasting down the phone from the customer sitting in the dark? Will there be clear arrangements in place when there are Power and Water emergencies and outages, and how will those be communicated to customers?
The shared service element remains a tangle of service level agreements all over the place, with no clear date in sight for clear separation. We have been told everything will be the same but different on 1 July 2014 under these new arrangements. You have to question how the shared service arrangements will go post July 1, and if it will be as clear cut as the government would like us to think.
We have heard much from this government that changes to date are designed to create a more competitive market so household customers and businesses have access to more deals on cheaper electricity, but this has not been the experience down south where customers have ended up paying more.
With a small customer base in the Northern Territory, one could argue it would be difficult to attract companies to take on the task, given the numbers of customers are not so high. As I have said before, it is clear they will be after the big customers first, not the small household customers the government would like to promote, on a regular basis, as being beneficiaries of this structural separation. Customers have already been subjected to a 25% increase in power bills under the CLP, and this is set to rise on 1 January.
We know the Utilities Commissioner has also approved around a 30% increase to the network tariff, and we are yet to fully understand the government’s plans as to how these increases will be passed on, as they are meant to be in place as of 1 July.
In the bush customers use power tokens to pay for their power through meters. People in the bush have also copped price increases, and the bush members of this parliament will tell you some stories about the impacts they have seen there. People have chewed through their power faster than expected and shops have sold out of power tokens due to demand. Everyone has borne the brunt of the changes, and despite the government saying nothing will change in the bush, current arrangements are only in place for another two years; someone has to ask what will happen after that. Who will bush customers be dealing with when it comes to power tokens and issues to do with their power? Will they be dealing with the Retail Corporation or the remote operations section of the Power and Water Corporation? These are more questions about the details of the split which seems to be still under way.
We know that most things tend to cost more in the Territory. Geographic isolation, a small and spread out population and rugged conditions mean there are challenges in getting goods and services at the same price as down south. We see it with groceries and petrol, as well as the production and delivery of electricity. To make sure Territorians can afford electricity and water, the government has paid a community service obligation to the Power and Water Corporation, which is then passed on to customers to help protect them being able to keep the lights on. It recognises the essential service Power and Water is and provides to the Territory. We need to hear details from the government around how the split of Power and Water and the creation of the Power Retail Corporation will impact community service obligations designed to help Territorians afford electricity, water and sewerage. These payments presently benefit every Power and Water customer, both urban and bush, and they help protect everyone from the enormous costs of producing and delivering power and water to help keep the cost of living down.
During this debate we need the government to confirm what its plans are in this area and as a future result of this structural separation. Will community service obligations be paid directly to the Power Retail Corporation to help keep prices down for customers, or will they be paying them to the Power and Water Corporation through its power networks or remote operations section, for example? How will the government handle this? Through the Public Accounts Committee we heard that external retailers find it challenging to compete in the Territory with the subsidies in place, but if the answer is removing them to facilitate increased private sector competition we have lost the game already, given the apparent purpose of this legislation and the split of Power and Water is to keep a lid on power prices. One has to ask if this will happen in reality, especially since the government has been unable to quantify this or show any evidence or forecasting on how this will work with tariffs for everyday households and businesses.
The government’s mantra about driving down power costs for everyday customers does not stack up. There is no evidence of financial analysis that Territorians have seen to show how this will work and impact on their bills. Staff within retail have little certainty going forward under their new arrangements as well. They have recently found out where their future lies within the retail and Power and Water Corporation and where their roles may have perhaps changed. Staff are currently under the Power and Water EBA, which expires next year; what happens after that? Working in retail is certainly not a cruisey job. They are on the front line, dealing with stressed customers trying to afford their bills every day. Staff deserve to know what is ahead of them, given retail workers will be subject to some of the most dramatic changes being driven due to the split, and their shared service arrangements will continue for some time.
They will have some of the most complex shared service arrangements in place, and this puts them in the higher risk box of something going wrong post 1 July implementation. Will staff who are most impacted – experts on the ground who know what is going on and what is not – have a voice and will they be listened to by new management and their boards? I hope retail staff are listened to throughout this change process, as well as customers who these changes will affect. There are also questions around the real cost of establishing the Power Retail Corporation. We know it will have a new board, chief executive, chief financial officer, branding, stationery and, eventually, new systems. We then have to ask what the real costs will equate to.
We heard at the Public Accounts Committee hearing that this year alone, Power and Water accounts the cost of the split to be about $2.2m; NewCo had $6.8m as an estimated cost. All of these costs were based on best case scenario estimates, and are still to be reviewed after the legislation goes through.
Will there be any transparency for Territory taxpayers regarding real costs, especially after the government rams this legislation through so it can say it is done and dusted, and it can reforecast its estimated budgets? What unanticipated costs will come up post separation? The government must tell Territorians what the split of Power and Water and the privatisation agenda is costing everyone; we will certainly be pursuing that at estimates.
The Power Retail Corporation Bill is one part of the structural separation agenda Territorians have had no say on. They have not been consulted on what they want to see with their utility, and this is another step towards privatisation in the Territory. This bill will create the Power Retail Corporation, and will not deliver cheaper power prices for customers in the long run. In fact, it is most likely power prices will continue to soar and put more pressure on the cost of living for everyone.
This aspect of the structural separation appears to be one of messiest, and staff and structures still have many questions ahead after 1 July. Again, I state for the record that the opposition will not be supporting this bill. Thank you.
Mr WOOD (Nelson): Madam Speaker, I thank the member for Wanguri for her hard work in dealing with this complex issue. I have a few minor questions to ask in my response. Why does the government want to allow, at some stage, RetailCorp to generate electricity? Is it because it wants it to operate as a company like any other? If that is the case, and you will allow RetailCorp to generate its own electricity, will you ask it to split again? This is my argument about the number of boards. If RetailCorp has a board, and it then buys generation, will you require it to split up so it is transparent as well? That is what you are doing with Power and Water, breaking it into three, so if RetailCorp decides it wants to generate electricity, does it have to do the same thing and have another board to run its electricity side? I am not sure.
I also wonder how far ahead we are thinking by saying RetailCorp will have the ability to generate electricity. Where will it get its funding, or what is the process for it to raise funds? It is not something that would be cheap. I am interested to know why it is there and how it will work in practice. The issue I think the member for Wanguri was hinting at in her contribution tonight was to do with the cost of the separation.
I would imagine the retail section is already a retail section. The member for Wanguri has much more experience in that area, and she will tell me that it also looks after sewerage and water. How will all of that work? What is the cost of separation? Will they work out of the same building? Will there have to be two completely different IT systems or will Power and Water as we know it, looking after sewerage and electricity, rent the IT system from RetailCorp so we do not have to buy a new one? After all, the system is already there. The system we have at the moment allows people to be charged for water, sewerage and electricity. Are we going to break that up? What are the financial and practical effects of that break up? That is something the government needs to answer.
The other interesting area concerns all of the huff and puff about bringing people into a competitive market and putting Power and Water on an equal footing with other industries in the energy market. Part 4, section 13 of the bill says RetailCorp is exempt from local government rates. What sort of level playing field is that? I am sure Origin pays rates. Why has the government decided to give itself, or one of its own government corporations, a freebie? That is not fair. If you believe it needs to compete on an equal footing, it should pay rates. It is not a charity organisation anymore. You are trying to turn it into a competitive organisation which is profit-based, even if it does not make much money. I see no reason why either GenCorp or RetailCorp should not be paying rates.
If they are taking over some of the facilities which Power and Water already has there is a certain amount of land which I am sure local government would appreciate getting some rates for. After all, we know there is a move by Power and Water to charge local government a fair bit of money for power poles. They never had much say in it the first place, but street lighting will be a very big expense for local government. It is not fair on local government that RetailCorp and GenCorp will be exempt from paying rates.
I raise those issues because I forgot that I had marked them down in the legislation for discussion. In case I do not get another opportunity, I also thank Mr Tregilgas and staff from Treasury; even though we might have a difference of opinion on some of these changes, they provided some briefings and spent a fair bit of time with the PAC answering questions, so I do appreciate all of that hard work. As I said before, I would have liked a few more hours with you to answer many more questions which needed to be answered.
I thought I would put on the record my thanks to Mr Tregilgas for the work he has done. So we do not have to go to the committee stage I will see if the minister can answer these questions as to why RetailCorp has the ability to generate electricity, how that would work, if we need another board, etcetera, etcetera and the funding and local rates issues as well.
Mr McCARTHY (Barkly): Madam Speaker, it would be remiss of me not to participate in this final debate, and it deserves an analogy from the equine …
Mr ELFERINK: A point of order, Madam Speaker! Can I assure the member for Barkly it would in no way be remiss of him not to participate in this debate.
Madam SPEAKER: Sit down, member for Port Darwin. It is not a point of order.
Mr McCARTHY: I will use an analogy around the equine species. The member for Sanderson, in his last contribution to debate, said he will fix the dead horse I am flogging. It is way beyond his bed time, and other members might agree on that. This is about a trifecta, and the Treasurer has nearly gotten to the booth to pick up on it because he has gotten three up tonight. Those three bets are major economic reforms which will change the face of the Northern Territory and its constituency. We will wait to see, because we have been told it is good medicine; it has been administered and the proof will be in the outcome.
The Treasurer is happy to go down this road, and it relates to a clear definition of policy between the government and opposition. The mantra of the government, which behaves more like an opposition than a government, is interesting; it says, ‘The Labor Party has no policies’. I remember when we hit Terry Mills and the CLP opposition with the same strategy, and it had nothing and floundered. However, what emerged was a glossy five-point plan and some very well-orchestrated media events around signing contracts in the bush and, bingo, it won government. We will not go into that long story, but it is interesting to see the government acting like an opposition and challenging the Labor opposition about having no policies.
We have very clear alternatives and the opportunity for policy development. People talk to us all the time, and this legislation is a hot debate in the constituency. I was in the bush on Monday, Tuesday, Thursday and Friday, and on Friday I had the opportunity to talk to a constituent who is a CLP voter, well and truly. That constituent told me they are not happy with the government. There are many issues, but they are backing the opposition because it has the opportunity to make changes. This constituent, one of yours, said to me, ‘I am going to back you guys right through because coming up to 2016 I want to see what you have to offer. You are our only hope because these guys have lost the plot!’
We will continue to monitor your legislative pathways, your governance and, at the same time, we will continue to communicate with the constituency, which is talking about you. We welcome that opportunity because this is policy development and the Territory will see clear alternatives articulated. In the meantime we will see how this trifecta pays out. You might collect the cash on the night, but we will see how the account holds in the future. It will be Territory families and businesses judging you accordingly. We have been told to trust the Treasurer. I am not putting money on it, but I will continue to monitor your movements, your legislation and the outcomes of what you are delivering for the Northern Territory and future generations.
I conclude by thanking the member for Wanguri, who has led the opposition benches through this very complex and challenging legislation. As a shadow spokesperson for the portfolio area there has been a lot of work done by the member and staff on the fourth floor. It has been a good experience to be walked through it and briefed, as well as the discussions around Caucus, all in the same room. The healthy political debate which goes on in those sessions and the learning which comes out of them – the member for Wanguri has done an incredible job and we have learnt a lot about having a clear policy alternative, a healthy debate and an opportunity to present that to the Northern Territory.
The Treasurer did not answer any of my questions in the last debate, he completely ignored me, went back to that lovely blue book we shared and quoted an economist. I hope he answers the member for Nelson’s questions this time around because I am interested in those answers as well. As far as my questions go I will take that back to that constituent, one of yours, who said they are putting their money on my horse because we offer real change. I will say sorry for not getting answers to all of the questions, but we will now watch, listen and learn.
Mr TOLLNER (Treasurer): Madam Speaker, I again thank and praise everybody who has spoken on this bill. I appreciate all of your comments and they have been extraordinarily interesting to listen to.
The member for Barkly is one of the great characters of this place; he always has an ability to amaze, and he did that tonight. He has nailed it; there is a clear policy debate now occurring between the government and opposition. I think the opposition’s policy, if I am wrong please correct me, is to do nothing, and that is fine. It thinks the current system is working great and it is nothing a few more taxpayer dollars would not fix, if that is what is required, but it wants to leave it as it is. It wants to leave the status quo, but on this side of the Chamber we are vying for change and it is that change which has caused this debate.
It is an interesting debate because the Northern Territory branch of the Australian Labor Party is showing itself to be somewhat different from its national masters, because its national masters were many of the drivers of these reforms across Australia.
Without doubt, in the last 20 years we have seen state and territory Labor governments advocate for this type of market reform to occur in their jurisdictions. I talked earlier today about the COAG energy ministers, and everybody had a bit of a chuckle because we know there are only two Labor energy ministers on COAG at the moment. The majority of them are conservative ministers, but it was not too long ago that almost exactly the opposite was the case, and the COAG energy ministers never changed their spots at all in relation to this debate. They stuck true and it was a reform which has received bi-partisan support around Australia for the last 20 years. Part of the strength of these reforms has been the bi-partisan nature of them.
That shows a sign of maturity in the Australian political system. It is too bad in the Northern Territory that we have a Labor opposition which wants to play funny political games with something like this, advocating a ‘do nothing’ policy, but that has not been the case in any other jurisdiction in the country.
Most recently the former federal Labor Resources and Energy minister Martin Ferguson put out an energy white paper just before Labor lost the last election. I recommend that white paper to members opposite. See what your national energy policy actually is because you might find the Territory Labor Party is out of step with its national masters.
The member for Nelson raised some issues, one of which I was not aware of, and I am glad he did. Firstly the retail business cannot generate electricity for five years. That is because we want the market to establish somewhat before we allow the retail and generation businesses to merge, any generator to start selling electricity or retailer to start generating electricity.
The bit of information I was not aware of was the rates exemption. I have been informed that PWC has never paid rates, and pays what is called ‘tax equivalents’. That is the equivalent of what it would pay in rates. The only difference is it does not go to local government but to the Northern Territory government. In another debate at some stage I might put my Local Government minister’s hat on and try to rectify that situation, but in answer to that question about why it is these new companies will not be paying rates, it is maintaining the status quo that PWC set in paying tax equivalents rather than rates. As Treasurer of the Northern Territory, it is fantastic it is paying tax equivalents. As Local Government minister I possibly would like to see local government strengthened. It is an interesting situation.
Member for Barkly, this will not be the last debate. This is the start of a process; your analogy with horse racing is an interesting one because the winner has not crossed the line. I am big enough to acknowledge that, and there are a few things yet to happen before we have a true energy market.
I would like to see the AER operating in the Northern Territory; there must be legislation for that and my hope is it will be in position by 1 July 2015 to take over from the Utilities Commission. However, there is still a bit of work being done behind the scenes by the Utilities Commission, Treasury and the AER. This is being clouded by almost a national demarcation dispute between the ACCC and the Department of Industry, if you want to get down in the mud with these things. The AER is a little complicated at the moment because there is a turf war going on between Treasury, which looks after the ACCC, and the Department of Industry, but I was assured last week that it is being sorted out very quickly. The AER is keen to take over the regulatory role, but there is a transition which has to occur and it will require legislation. You have not heard the last of this issue, member for Barkly.
What will also be a test for these reforms is the introduction of competition, particularly in the generation area. There is some interest in the Northern Territory, but I am also aware of the concerns of those interested that we may not get there in having a truly competitive marketplace. If that situation ends up occurring we may not get competitors, but this is a start towards having a genuine electricity market operating in the Northern Territory. As I say, the Australian regulator is yet to get on board and, similarly, we have not seen any generator sign on the dotted line and reach financial closure yet in order to set up in the Territory. I hope that will eventuate.
I understand there are some members who have genuine concerns; I do not think everyone is playing silly political games. I ask you to trust in the government, trust in governments around Australia and trust in the Australian people to make wise and informed choices. An enormous level of work has gone into these reforms nationally. All the heavy lifting has been done for the Northern Territory by other jurisdictions, and we have seen these systems trialled in every state and territory around Australia.
I note people have talked about Western Australia a few times tonight, saying its system is a bit stuffed. It is, but it has tried to create its own system. It does not have the Australian Energy Regulator, it did not try to model itself on the National Electricity Market and has pretty much gone out on its own. We are not doing that in the Northern Territory; we are adopting National Energy Market rules and are trying to replicate that. It may well be 50 or 100 years before we see a power line going into the grid, but we will have the same rules, and that inspires confidence in the marketplace.
Australia has one of the best energy systems in the world without a doubt, and much of that is because of the hard work of others who have gone before. For that reason I am more than happy to commend this bill to the House.
A bunch of people should be thanked, including Alan Tregilgas, Craig Graham from Treasury and John Baskerville, to name three very important people. A number of people behind them have provided assistance and support as well.
Motion agreed to; bill read a second time.
Mr TOLLNER (Treasurer)(by leave): Madam Speaker, I move that the bill be now read a third time.
Motion agreed to; bill read a third time.
ADJOURNMENT
Mr ELFERINK (Leader of Government Business): Madam Speaker, I move that the Assembly do now adjourn.
Motion agreed to; the Assembly adjourned.
Last updated: 04 Aug 2016