Page 977 - Week 06 - Wednesday, 26 July 1989
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Mr Collaery: Do you know all about it?
MR WHALAN: Yes, and I must say that that is another one of those areas that Graham Downie researched so thoroughly.
Mr Collaery: We will read that in a minute. Are you going to let us read it?
MR WHALAN: Yes, there is the article there. Do I have leave to present this now?
MR SPEAKER: Yes, you certainly do.
MR WHALAN: His speech writer did not tell him his sources. This results in an approximate 28 per cent difference in the cost of gas to AGL in Canberra and to AGL for most areas of New South Wales, and that has been stated by Mr Collaery and Mr Downie. It appears that the 28 per cent differential results primarily from the 6 per cent profit margin applied and the authority's attempt to recover the costs of the branch line to Canberra within the same time frame as cost recovery on the main pipeline.
The Government is clearly concerned at the cost differential and the flow-on impact on Canberra gas consumers. This issue is also of concern to AGL Canberra, it assures us, and indeed was raised in its application to us. As part of the review of the agreement with AGL, the Government will be taking up with the Commonwealth Pipeline Authority as a priority the reasons for its charging differential, with a view to removing the inequity.
In relation to the recent application by AGL for a price rise, it sought an increase in tariffs of 5 per cent effective from 1 July 1989 and a further 5 per cent effective from 1 January 1990. As advised to AGL, the Government was not going to be rushed into making a decision on its application.
The Government carefully considered it and decided to approve a 5 per cent rise in maximum tariffs and to review the existing agreements, including pricing, the Pipeline Authority charges and legislation, and any subsequent application for a rise in tariffs would be considered after the review. This has been made quite clear. No further increase will be approved in the maximum tariffs without there being a review by the Government of that situation.
The decision to agree to a 5 per cent rise in maximum tariffs, effective now, was made in view of the fact that the maximum tariffs had not been altered since 1 July 1988, that the cost of gas from the Pipeline Authority increased by 4.1 per cent from January 1989 with a forecast overall rise of 6 per cent in the cost of gas expected for 1988-89, that the 5 per cent increase was less than the forecast increase in the CPI for 1988-89, and that AGL is expected to undertake a substantial capital works program
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