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Legislative Assembly for the ACT: 1998 Week 1 Hansard (29 April) . . Page.. 166 ..

MS CARNELL (continuing):

The Government has, for some time, been concerned about the likely impact that reform of the electricity market will have on ACTEW. The South Australian Government has decided that it can no longer afford to own the local electricity industry now that it is faced with the prospect that the value of those assets may be halved in the light of continuing competition from interstate. It should not be inferred from this comment that this Government will do the same with ACTEW. Despite the many changes in the electricity market, ACTEW is predominantly a monopoly as an electricity distributor as well as a water and sewerage utility. There should be no attempt to create a private monopoly unless there are special reasons for doing so and there are adequate community safeguards in place.

However, for some government business enterprises, it may not be sensible for governments to continue to own those businesses if they are unlikely to survive or it may not be prudent for governments to risk the major capital injections needed so that particular government business enterprises can continue to grow or, in some cases, just maintain their position. It never makes sense to throw good money after bad, and it would be downright irresponsible to waste the public's money on a business that is losing value.

These are, obviously, complex issues that require a detailed assessment of whether there are sufficient benefits to justify continued public ownership. This assessment requires a careful scrutiny of the services currently provided, the changes that could be brought about by different business structures and the changes that could be brought about by continuing government ownership. Members of the Legislative Assembly should be aware that, under the competition principles agreement, the Government is obliged to undertake a public benefit test in reviewing the structure of government business enterprises. The public benefit test shall take into account a wide range of factors, including ecologically sustainable development, social welfare and equity considerations, community service obligations, industrial relations, public health and safety, the environment and economic development, as well as the interests of consumers. I would also like to stress at this point that the competition principles agreement specifically states that it is not intended to promote public or private ownership.

The Fay Richwhite report on ACTEW that I tabled earlier today makes it absolutely clear that we need to undertake a scoping study of all of the options available to the Government. While ACTEW has striven to improve efficiency and to expand its operations, there is certain to be some market loss - we have already heard about some of that - and a marked reduction in certain prices and government revenues as the electricity market is exposed to further competition. It would be irresponsible for any government not to actively address the issues raised in the Fay Richwhite report. What is at stake here is the potential for certain assets to lose value rapidly and cost the Territory many millions of dollars if we do not make the right decisions.

I would like to take this opportunity to table a recent resolution of ACTEW's board, drawing the Government's attention to their serious concerns about being able to maintain the value of the electricity business. I think it is really important that members actually read that. The prevailing climate of increased competition, whereby ACTEW may be disadvantaged in trying to match competitors' prices without running the risk of incurring unacceptable financial losses is, quite frankly, Mr Speaker, mutually exclusive.

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