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Legislative Assembly for the ACT: 1999 Week 10 Hansard (12 October) . . Page.. 2962 ..
MR HUMPHRIES: He might have been referring to the Chief Minister. Mr Egan was not referring to the Chief Minister in the comments he made last week, as I understand them. That is a matter for Mr Quinlan to take up, no doubt, in some sort of party meeting. Mr Quinlan referred to the report of the joint working party on the proposed merger of ACTEW and Great Southern Energy, and in particular to the 60 per cent debt-to-equity ratio recommended in that merger. That is a recommendation specific to the particular proposal which was being put forward in that scenario - that is, a merger between Great Southern Energy and ACTEW.
The recommendation was that there should be a debt-to-equity ratio of 60 per cent, and that a large amount of money could be repatriated to the relevant government or governments. Mr Speaker, I believe it would be quite fair to assume - in fact, it would be my view - that a lower ratio would apply for ACTEW as a stand-alone entity; that is, the 60 per cent which was recommended in respect of the merger was 60 per cent for that merged entity. It is quite unrealistic to expect that you can have a blanket figure and say, "Here is what we think is appropriate debt-to-equity ratio for ACTEW. It does not matter what alliance or merged status it might have. It is always 60 per cent". As far as I can see, the 60 per cent recommended for an entity merged with Great Southern Energy was an entirely reasonable ratio to adopt. I have no evidence to suggest that it was not. ACTEW as a stand-alone entity in the ACT, I suspect, would support a rather lower ratio of debt to equity.
I am surprised that Mr Quinlan asked the question, because his own colleagues in the Australia Institute recommended, in respect of ACTEW as a stand-alone entity, that there should be a repatriation of capital from ACTEW to the tune of $530m and, what is more, that that $530m should be serviced purely by earnings on water and sewerage from ACTEW. That would be a very significant ratio of debt to equity, I would have thought. Given the support Mr Quinlan lent to the Australia Institute report at the time, I would assume that at least at that stage he had some level of support. But it appears that that may not have been the case.
We believe it is important to make sure that ACTEW is not overburdened. I will not nominate what the level of debt should be until I know exactly what kind of future ACTEW will have. I suspect that ACTEW as a stand-alone entity within the ACT would have a lower ratio than 60 per cent, but exactly what it might be is a matter for determination as we chart the future for ACTEW. But either way one unmistakable message comes out of this debate; that is, that ACTEW does have some uncertainties in its future. The possibility of settling that uncertainty with a merger with a major power utility in New South Wales seems to have receded.
Mr Berry: That is the understatement of the week.
MR HUMPHRIES
: You ask Mr Egan about whether he thinks it is still on the cards or not. It is not for me to say. It seems to me that it does not have much life in it. It is an ex-proposition, as Monty Python would say. I think that those opposite should ask themselves what they are doing to secure the future of ACTEW. What are they proposing? What are they putting up as the way in which we can make sure that
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