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Legislative Assembly for the ACT: 2000 Week 2 Hansard (1 March) . . Page.. 447 ..

MR WOOD: I ask a supplementary question. Minister, I would like you to clarify your answer. You used the words "continue to monitor". Is the Government going to continue to monitor the Federal Government or nursing homes? Is there something which the ACT Government does not get involved in?

MR MOORE: I apologise for the lack of clarity. I meant that we will continue to monitor how the Federal Government handles this situation. At this stage to get into the business of monitoring nursing homes and taking over Federal government responsibility is not an appropriate role for us to take. We do have the ability to regulate these things, but I doubt if there will be a great benefit to us in doing that if the Commonwealth system is working. It seems to me that the Commonwealth is looking at that issue very carefully and hopefully very urgently.

MR RUGENDYKE: My question is directed to the Treasurer. Minister, in relation to the proposed ACTEW/AGL joint venture, I understand that ACTEW is prepared to contribute other assets to the joint venture, such as TransAct, Cranos, ACTEW China and Ecowise Environmental. Could you please advise the Assembly why these assets are being considered for transfer to the proposed joint venture?

MR HUMPHRIES: I thank Mr Rugendyke for his question. The idea of bringing many of the assets of ACTEW and AGL together in this joint venture is to create a large enough commercial activity to be able to exercise some weight, some power, in the marketplace. The smaller the trading entity competing in the marketplace, the less likely it will be to effectively muscle in on the territory of much larger commercial bodies.

As Mr Rugendyke would be aware, there have been a number of amalgamations of utilities over the last couple of years. There is a great deal of power exercised in the Australian marketplace and lots of other marketplaces. My perception is that the players are getting larger. The smaller you are, the less chance you have of running loss leaders or of being able to undercut your opponents with cheaper prices. You do not have economies of scale. There are all sorts of reasons why you end up being less well placed in the marketplace.

Putting as many of the assets as we can into this joint venture gives us the chance to do two things: Have a larger enterprise which feeds off synergies and relationships between various components of both businesses and be able to be provide a lower exposure to risk because of the size of the enterprise concerned. For example, if one area makes a serious loss because it has a competitor who can undercut it badly, the other areas can carry it through that period of loss.

The issues Mr Rugendyke mentioned are not especially large. They would not exactly make or break the deal. For example, TransAct has only 19 employees, and I think ACTEW China has fewer than that. So we are not talking about huge numbers of individuals. But there seems to me to be strength in having them together in the one enterprise. If, for argument's sake, the ACTEW/AGL partnership were to be swamped by the competition of other bigger players, how much more would ACTEW by itself be swamped by that same level of competition?

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