Legislative Assembly for the ACT: 1999 Week 4 Hansard (20 April) . . Page.. 997 ..
MR QUINLAN (continuing):
in the ACT's favour. Asset valuations for Great Southern carried out at acquisition time are at the current replacement costs. They have been in place for only a few years, so their valuations would be as modern as the ACT's. ACTEW has a debt-equity ratio of about 9 per cent, which is a bit worse than the 4 per cent before the Carnell Government started taking capital out of it and spending it on recurrent expenditure. Great Southern is up around 24 per cent.
Without boring you with any more of the details, it seems to me that one or more than one of the following is a prerequisite to a successful workable merger: The ACT would invest more assets in the enterprise than would Great Southern, reportedly without a commensurate level of control. The New South Wales Government could need to buy part of the ACT assets to create a balance. I have my doubts. The new enterprise would need to borrow something like $800m to $900m to buy the ACT's excess share. New South Wales could agree to less than 50 per cent of control. I have my doubts. The merger could be ultimately limited to electricity supply. That is a possibility.
I wonder why we are not, in fact, looking closer at our capacity to increase our power in the market, but to do that as a priority. We have water and sewerage and we have to bundle them all up; it is all about economies of scale. Why are we not looking for these strategic alliances first? Why are we not looking for the best way to protect ACT assets, to maintain control over our own water supply and our own sewerage services, for God's sake, without immediately leaping into a situation that will, woops, inevitably lead us to "freeing up excess capital" - the euphemistic term for selling down a very large chunk of the asset that the people of Canberra almost unanimously conveyed to the Government they do not want to sell and that this Assembly decided we would not sell?
You will understand a certain scepticism on our part when we have the same consultants on the job and we have a working party made up of officers who work directly to senior politicians who have clearly demonstrated a willingness and desire to sell assets. I believe that it is incumbent upon this Government to start from this point to convince the people of Canberra that this exercise is being carried out objectively by declaring some of the boundaries and limitations that you would put on the establishment of a merged enterprise with a body outside the ACT that carries with it the loss of control over the very basic services that ACTEW now provides.
MS CARNELL (Chief Minister and Treasurer) (4.04): The MPI, it seems to me, addresses two issues; namely, why is the ACT Government pursuing partnership options for ACTEW Corporation, and is the Government's intention in looking at merger options something to do with privatisation by stealth? It is very obtuse but, for all of that, I will try to address them.
I must say at the outset that the Government has not developed a position on the details of any partnering arrangement for ACTEW; it is far too early for that. So today we should really discuss whether it is proper for the Government to be investigating the partnering options that might be available, rather than the pros and cons of any particular merger or other partnering options. Any detailed debate on merger or partnering options should quite rightly be left for when the Government seeks the Assembly's approval at a later time; in other words, Mr Deputy Speaker, when all of the information is on the table.