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Legislative Assembly for the ACT: 1999 Week 1 Hansard (2 February) . . Page.. 39 ..

MS CARNELL (continuing):

Secondly, private sector owners will be able to extract additional benefits and efficiencies through economies of scale as ACTEW, which is now one of the smallest utilities in Australia, becomes part of a larger whole. In other words, Mr Speaker, if ACTEW becomes part of a bigger entity, whether in Australian or overseas terms, the capacity to buy better in the market, the capacity for economies of scale in a whole range of areas, is there, but not if it is in public ownership, not if it stays as the little ACTEW in the ACT.

Thirdly, Mr Speaker, private sector owners have access to finance to be able to pursue growth and diversification and the willingness to take the associated risks, whereas prudent governments do not. Mr Speaker, who in this place would suggest that ACTEW go into the market and buy, say, an electricity distributor in Victoria or New South Wales? How about going into New South Wales and buying one of theirs? That would involve potentially billions of dollars that may or may not make a profit. Who would wear the loss? Mr Speaker, it would be the people of the ACT. Government owned entities cannot take risks. So, if you have got a situation where a government owned entity has unlimited exposure to a full range of commercial risks, a public sector operator that cannot at the moment get access to efficiencies, buying power and all the other things that go with being a little entity, and also a situation where there is simply not the risk capital to grow in the market, what do you have, Mr Speaker? You have a capacity for no growth.

What this means is that ACTEW is worth $500m more to ACT taxpayers if we sell it now and extract the full value of the asset. It is actually quite simple to understand. This premium, as the consultants' report shows, will decline over time if we sit on our hands and do nothing. In fact, the premium could decline very quickly if New South Wales and South Australia elect to sell or lease out their electricity businesses, which could release about $30 billion worth of assets into the market. Already this week we have seen the Victorian gas entities go to the market. And what was the outcome? It was a significantly better return to the Victorian Government than it expected. In fact, the markets are saying, "It really shows that right now is the time to sell, simply because there is money out there to invest". The Western Australian Government is currently looking at doing exactly the same with its gas assets, simply because the return to the taxpayer is better.

Mr Speaker, ACTEW would struggle for recognition in the face of such a huge market for investors' funds. If we are forced to put ACTEW out at a time when there are that many assets, when there is some $30 billion worth of assets, on the market, ACTEW simply would be swamped, Mr Speaker. Right now, that is not the case. The Government's commitment to maintain the value of the asset, our commitment to the people of the ACT, can be met only through the proposed sale and concession of the asset.

What is the Labor Party's plan to maintain the value of the asset, Mr Speaker? We have spoken about that a lot this morning. Do they plan to inject enough money into it so that it can generate the economies of scale we are talking about? Mr Speaker, how do they plan to generate risk capital into the market? What services would Labor cut to fund ACTEW's expansion. We do not have any other money anywhere else. So, if the Labor Party is planning to make ACTEW grow, it will need capital. Where will it come from?

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