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Legislative Assembly for the ACT: 1998 Week 11 Hansard (9 December) . . Page.. 3352 ..

Mr Moore: You do not want an answer.

Mr Smyth: They do not like the answer.

MS CARNELL: I am sorry that I know the answer. If they want one to which I do not know the answer, they will have to try harder, Mr Speaker. With regard to valuing assets for sale on the market - listen, Mr Stanhope - the basis upon which people buy things is the cash flow. Surprise, surprise! It is actually based upon the sort of cash flow they would be able to get for that asset, such things as opportunity and cost coming together in basically what they would be willing to spend or to pay for an asset. So, Mr Speaker, using cash flow information - - -

Mr Berry: Why not the other way?

MR SPEAKER: Order! Mr Stanhope is trying to hear the answer. Do not be discourteous to your leader.

MS CARNELL: Mr Speaker, using cash flow information and a weighted average cost of capital discount rate - - -

Mr Berry: Tell us what that means.

MS CARNELL: I can if you would like.

MR SPEAKER: Mr Berry, it would take far too long to explain it to you. Would you please be quiet.

MS CARNELL: If you would like, Mr Berry, I am more than happy to take you outside later and give you a full run-down on the weighted average cost of capital discount rate. I am even happy to do it now but it would waste question time.

Mr Smyth: Get Mr Quinlan to explain it; he knows.

MR SPEAKER: Order! Chief Minister, continue, please.

MS CARNELL: Mr Speaker, this is a universally accepted methodology for estimation of the value of the business. It is not used only by the private sector. All governments who have considered selling businesses have used exactly the same methodology. It is interesting to note that in this report in which the Australia Institute have valued ACTEW in public ownership they make the point that the methodology that they have used is still being debated and is open to debate by economists. Mr Speaker, for that read, "Nobody yet agrees with us". On one side we have a situation where ABN AMRO are using the same methodology as is used by governments and the private sector to value businesses for sale and on the other side we have a methodology that the people who wrote it believe is still being debated by economists. Everything in the world is being debated by economists. It just means that they do not know the answer yet.

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