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Legislative Assembly for the ACT: 1997 Week 14 Hansard (11 December) . . Page.. 4991 ..

MR KAINE (continuing):

The second part of Mr Moore's motion is far more substantive. He seems to have some concerns about what the Government's intentions are. I just point out that section 20 subsection (2) of the Act merely prescribes certain things that the Assembly thought that the commissioner should look at. It does not say that he should not look at other things as well. It does not preclude the commissioner from looking at other things. I suspect that he would look at other things, whether we specifically spell them out here or whether we do not. The particular things that it is suggested be added are all about the point that Mr Moore concluded on. They are all about ensuring that at the end of the day the consumer pays a fair price, whether it is for electricity, water supply or any other service that ACTEW provides. I refer specifically to paragraph (c), in which we ask the commissioner to consider the desirability - that is all we are asking him to do - of removing cross-subsidies. If we do not ask him to do that, he could well come up with a pricing regime that allows the electricity and water authority to charge more for electricity than was really justified so that they can cross-subsidise water supply or sewerage. The people who buy the other services could be subsidised at the expense of people who use electrical energy.

Mr Moore propounded the concept of fairness. I do not see how the commissioner can come up with fair prices without looking at the elimination of such cross-subsidies as currently exist. When the commissioner looks at it, there may well be cross-subsidies between classes of ACTEW customers, but there may also be cross-subsidies between other business entities within ACTEW. In other words, the electrical and water supply business may be generating surpluses that are used to fund some of the other business activities that ACTEW carries on and that may have nothing to do with water or electricity supply. I would submit that, unless the commissioner looks at that cross-subsidy problem, the consumers at the end of the day could well be paying unfair prices to maintain some form of cross-subsidy either internal to ACTEW or between the various customers ACTEW supplies. I do not see that there is any great difficulty. In fact, I would be most concerned if I thought that the commissioner was not going to look at the impacts of possible cross-subsidies.

Paragraph (a) asks the commissioner to consider the desirability of full cost recovery. If ACTEW does not operate on a policy of full cost recovery for the services it provides, eventually the taxpayer may well be asked to cover the shortfall. If they are not recovering enough through their pricing regime to cover the actual costs of delivering the service, where is the money going to come from to cover it? I would have thought that we would really want the commissioner to have a look and make sure that ACTEW is in a state of full cost recovery or, if it is not, consider the consequences of that.

I could go through them all one by one, but the final one Mr Moore referred to, paragraph (g), asks the commissioner to consider the desirability of appropriate implementation strategies to manage any adverse impact on the community. The commissioner may well discover that, in arriving at pricing regimes, there is an adverse impact on some consumers that needs to be dealt with. If there are any adverse impacts on some classes of consumers, I would prefer the commissioner to report back to me on his proposed strategy for dealing with them. If he does not come back with some strategy for dealing with them, somebody else has to develop one. We would have to commission somebody else to suggest how we might deal with these adverse consequences.

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