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Legislative Assembly for the ACT: 2000 Week 3 Hansard (7 March) . . Page.. 640 ..
MR STANHOPE (continuing):
What do we know of ACTEW's electricity distribution business? We know with certainty that the hardware associated with it is a natural monopoly. ACTEW owns the power poles and lines. No-one will build another distribution network. Distributors new to the Canberra retail market will have to pay ACTEW to use the network. There is no threat to that aspect of ACTEW's business. In fact, there is a prospect of new business.
Mr Speaker, perhaps some indication of the real thinking behind the enthusiastic support of the ACTEW board for this proposition comes from the preamble to the joint venture proposal, which says:
Reform of Australia's energy sector has increased competitive pressures in the generation and retail sectors ... The retail function involves significant low margins and significant economies of scale. These characteristics make it very difficult for small retailers such as ACTEW to compete.
So, according to the joint venture proposal, the risk to ACTEW quite clearly lies in the retail sector of its business. Then comes the magic leap in logic:
The proposal with AGL would provide the ACT with a unique opportunity to establish Australia's first multi-utility. The proposal would maximise the potential for the joint venture to be a viable ACT-based participant in the emerging national energy markets.
So that is what we are to become. We are to become a player in the emerging national energy markets. That is what the people of the ACT are signing up to become. Is the joint venture proposal a strategy designed to cope with the emerging risk to ACTEW's retail business - remember, a business that makes up 3 per cent of its overall operations - or is it something more on a grand scale, giving ACTEW and its shareholders, the Chief Minister and the Treasurer, the opportunity to strut the national stage and giving the CEO an opportunity to be a player in a game somewhat more exciting than the "boring little business" that he told ABC radio it was his fate to be a part of if ACTEW did not grow? One wonders whether a good enough reason to enter into a joint venture is so that the CEO will have a little bit more excitement in his working day.
The Government, as is its habit, has made much of its willingness to provide members with all the information available about this joint venture, to answer any questions and to provide whatever briefings are necessary. That process, again fitting the Government's habit, has been a farce, loaded with rhetoric and short on detail. What are we left with on which to base an informed decision about this joint venture? Not a lot.
Labor asked Professor Allan Hodgson, head of the School of Accounting, Banking and Finance at Griffith University, for his view on the adequacy of the evidence offered in support of the commercial viability of this proposal, and that was the sum of it: Not a lot. Professor Hodgson said that he was unable to make any assessment of the commercial viability of the proposal, based on his review of the joint venture proposal and the Treasurer's presentation speech. There was simply too much information missing. Professor Hodgson asked: "What were the details of the total values of the assets being brought to the joint venture by both parties?". How could we possibly be debating this
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