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Legislative Assembly for the ACT: 1998 Week 11 Hansard (9 December) . . Page.. 3367 ..

MR KAINE: Mr Speaker, my question is to the Chief Minister. Chief Minister, in connection with your Government's proposal to privatise ACTEW, particularly in connection with the water part of it, you have opted for a partial franchise proposal. My research into the privatisation of water round the world shows that where there has been a move to privatise water supply, and it has not been common, the proposition of franchising has not been at all common, and the proposition of partial franchising is extremely rare. In fact, there is only one country in the world which has generally adopted the notion of franchising the water supply to private companies, and that is France. Chief Minister, can you tell us what was the source of your advice that franchising - indeed, partial franchising - of the water supply in Canberra was an appropriate way to go in the Territory?

MS CARNELL: The advice did come from ABN AMRO, but I have to say that we have an officer who actually visited a number of those entities in France and had a look at the situation in other parts of the world as well to see how these franchises actually work. So, we have done quite a lot of research in this area and looked at the best possible way to maximise the value of ACTEW to the people of the ACT while ensuring that we maintain control over strategic assets, as we have said on many occasions, but also important things such as environmental issues, quality of water, and testing - all those sorts of issues.

We believe that the approach we have taken does balance the valid concern of the community to maintain ownership of strategic assets and, at the same time, ensure that those assets can be run in a cost-effective manner and achieve the sorts of community standards required from a price perspective, a service perspective and an environmental perspective. That is the reason we tabled the statement of regulatory intent. We have indicated that we will be setting standards - independent standards that do not exist at the moment. As we know, ACTEW does its own testing, sets its own standards and actually sells the product as well, all inside a corporatised entity. It even has a subsidiary company that does that.

Taking the approach that we plan and taking the regulatory part out of ACTEW itself, having that under the auspices of government so that government has control over standards of service, standards of testing, testing levels and so on - I think we are looking at NHMRC levels at this stage in terms of water testing - gives the balance appropriately. Again, ABN AMRO were a source of advice, plus the fact that we have had input from companies and have had an officer talking to the actual councils - they call them shires in France - and so on that have gone down that path, and have been going down that path for quite a number of years now.

MR KAINE: Thank you for that, Chief Minister. My supplementary question flows from that. If you have had lots of input, lots of advice and lots of research you will know that in France, where the majority of the world's franchising of water is actually carried on, the maximum period for which a franchise is granted is 15 years and the most common period is 10 years. The reasons for that are the very things that you outlined - the difficulty of imposing a regulatory regime and of policing and monitoring it.

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