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Legislative Assembly for the ACT: 1999 Week 1 Hansard (2 February) . . Page.. 57 ..

Mr Berry: They cannot be worth much if they are going to be so bad.

Mr Stanhope: Who is going to pay a billion dollars for that?

MR SMYTH: No, you are not listening. It is not whether we are good or bad; it is that we play a different game in a different market. If you want to put your head in the sand, that is fine; but what you are about to do is to fritter away the greatest asset that the people of the ACT have. (Extension of time granted)

Mr Stanhope says that our option ensures job losses. There may be job losses if ACTEW is sold. Their option confirms that there will be job losses, probably far greater than anything that would happen under us. Mr Speaker, in a very good market, ACTEW may retain 70 per cent of the contestable market. A bad performance may see it drop below 50 per cent. We would still have the same overheads but not produce the same dividend.

Mr Speaker, the only option recommended in this very flimsy report that we were given this morning is that we should take $300m from ACTEW. I wonder whether those opposite have actually done the sums on this. If we force ACTEW to repatriate $300m, that means that they would have to borrow $300m. What does that mean? If the $300m were borrowed at 5 per cent, ACTEW would have to find some $15m in interest. At 6 per cent it goes up to $18m. What if we got back to the glory days of ALP interest rates and it jumped to 18 per cent? Imagine having to pay the interest on $300m at 18 per cent, $54m worth of interest a year. There goes the ACTEW dividend. What about repaying the capital costs? Where will Labor get the $300m to pay back the capital costs? While they are getting that money, thinking about it, looking for it or finding it in the fairy floss, imagine the effect that would have on our credit rating, which would increase the costs of our loan. We are about to get into a vicious circle here, a circle into which Labor would condemn all the people of the ACT.

Where does the money come from to pay the interest? Again, you cut the operating costs or, in blunt terms, the jobs. You raise taxes or it comes out of the dividend. It is quite simple. So, what we have now is a dividend that the economic gurus of the ALP have actually managed to spend three times. It is already in our budget, Mr Speaker. Labor would use it to fund the superannuation and now they will need it to pay the debt on the loans that they have just incurred. While this death of a thousand cuts is going on, the value will be whittled away because ACTEW does not have the ability to compete in the new market.

Mr Speaker, there is no guarantee of success. Any losses would be passed on to the ACT Government and they would pass it on to the ACT taxpayers as owners of that business. ACTEW's shrinking customer base would leave little room for cross-subsidisation for any risk diversification and may force the customers of water and sewerage services to accept higher prices. In that kind of environment, the Government would have to look very seriously at withdrawing completely from the retail electricity market. If there is no money in it, why would we be doing it and incurring more loss for the people of the ACT? The financial structure of the company would have to be seriously examined. There would be inevitably some level of capital repatriation and, of course, the interest payments to service the loan would have an immediate effect on the dividend.

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