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Queensland Government Administration related to Commonwealth Government Affairs - 28/11/2014 - Certain aspects of Queensland Government Administration related to Commonwealth Government Affairs
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McCALLUM, Mr Lance, National Policy Officer, Electrical Trades Union of Australia

SIMPSON, Mr Peter John, State Secretary, Electrical Trades Division, Communications Electrical Plumbing Union

TRAILL, Mr Stuart Kenneth, Electricity Supply Industry Coordinator, Electrical Trades Union of Australia

[13:26]

CHAIR: We will continue on. Welcome, gentlemen. The committee has your submission. Information on parliamentary privilege and the protection of witnesses giving evidence has been provided to you. I now invite you each to make a short opening statement. At the conclusion of your remarks, I will invite members of the committee to put questions to you.

Senator CANAVAN: I would like to raise a point of order before we start. There seems to be a video camera over there. I am not sure whose camera that is. If it is the media's camera that is fine, but I do not think we approved the private recording of Senate proceedings. Can we check whose camera that is?

CHAIR: Who actually owns that camera? I would appreciate it if you would remove it. I invite the witnesses to now make a short statement.

Mr Simpson : Thank you for providing the opportunity for us to come and share our concerns. We have had long-held concerns about the way this government has operated. It stared about 2½ seconds after they were elected to parliament. As the committee would probably be fully aware, the LNP and the trade union movement do not have a strong relationship. We do not usually get along that well and that intensified after the election, particularly in relation to the electricity industry, for which we held grave concerns.

I wrote a letter to Minister Mark McArdle in April of the year they were elected, 2012, expressing those concerns. To prove my point, in my original opening statement about how they treat us, I got a one-page response saying—and I am paraphrasing—'You're a union. We don't particularly like unions. Go away'. That has pretty much been the correspondence between us and the LNP ever since.

We are used to that. We are not trying to be precious about it, but it gets a bit much when there are some serious issues in this industry. I will give you an example. I was driving home one afternoon—I cannot remember the exact date but I can dig it up if you need it—when I got a phone call from a Courier-Mail journalist asking was I aware of the Independent Review Panel that had just been put in place by the government to review the electricity industry. It was the first I had heard of it. As a key industry stakeholder, I would have thought we would have at least received an email, a phone call, a text message or a carrier pigeon—I would have been happy with that! We did not get that.

They went on to tell us that a bloke by the name of Tony Bellas would be the independent chair on the committee. I have known Tony for some years in different iterations over the years; he was part of Queensland Treasury at one stage under the Labor government and he was the Ergon Energy CEO under the Labor government, so I had had some dealings with the guy; I was familiar with him. Actually I had got reasonable rapport with him, to be honest, so I was not too concerned about his name being put forward, originally. As a part of that review panel, I was invited to go and sit there with the review team and go through the recommendations. I am a bit of a sceptical guy at the best of times, but when I was called over to do it I went to the effort and took the time to put together some paperwork and some ideas on what needed to happen to make the industry more efficient. There is no industry that I have ever come across in my experience that cannot be made more efficient, but there are ways and means as to how that is done—that is the issue.

When I went over, about two minutes into the meeting with the independent review panel it became very clear to me that the agenda was not what was in the scope of the original committee as had been given, and my suspicion was that it was about privatisation. I raised that during the course of the meeting. I said, 'This is all about privatisation; that is the main reason you've got us here—it is to set up this investigation that will deliver a privatisation outcome for the LNP government.' I was assured by all and sundry at that committee—and I have not got all the names, but I can soon dig those up as well—that that was not the case and that actually privatisation was not in the scope of the investigation that they had been undertaking. Lo and behold! At the end of that process, it was—it was one of the key recommendations that they privatise the government generation and distribution entities. I will let Stuart, when he gives his opening statement, expand on that.

But it got spookier and spookier as that process went on. I did not know Tony Bellas's relationship or where else he worked, but I then found out he was a key person—a chairman, actually—in ERM Power, a private gas peaking station operator. They operate gas peaking stations throughout Queensland and they are 100 per cent privately owned by ERM Power.

We then went on and did a bit more digging and we started putting in for some right-to-information requests, to find out what relationships existed between the LNP and ERM Power. That is all contained in our submissions. We have substantial RTI information, but a lot of that has been blocked, and one thing I would like to put on to the committee is that I understand you guys can have access to all the documents in the Queensland parliament that you need for the purposes of this committee—

Senator IAN MACDONALD: I don't think so.

Mr Simpson : I am sure you will have a go at it, Senator Macdonald, but we'll have a crack anyway. We have been stopped from getting a lot of that documentation, but the stuff we have found, I believe, uncovers some relationships that need further exploration, if I can put it in those terms. One day you give a donation to a political party; the next day you are pretty much a chairman of a government review panel.

The Tarong Power Station, one of our main baseload government-owned corporations in Queensland, was told to shut down two units, which will leave us short come the summer peak period for generating electricity. That shortfall is picked up by gas, privately-owned, peaking stations. So you would have to ask a couple of questions along those lines, I would have thought.

Again, we have not got the resources. We have not got the documents. We have started the trail but we cannot finish it. What I am hoping comes out of this process is that that will be further investigated, because the more we have seen there, the smellier it gets from our end.

We found meetings that were not disclosed, despite this government saying that they are the most accountable and open government in the entire universe. We found lobbyists that had met in boardrooms with LNP ministers that had not been declared. There were LNP fundraisers where ministers were turning up in the ERM boardroom. I am not a scientist, or a doctor like our previous speaker, but I am certainly a bit suspicious and a bit half-canny, and when I start smelling a rat I smell a rat. And I reckon there are plenty of rats to be smelt in this exercise. So part of our putting the submission together and part of us putting this RTI process in place was to try and join some of those dots. We have joined some of them. We certainly have not joined all of them. But I will leave that as the end of my submission and probably throw to Lance. He put the submission together for us.

Mr McCallum : Thanks very much, Chair, and I would like to echo Mr Simpson's comments of thanks for the opportunity to submit to the committee today. Since being elected to government in 2012, the Campbell Newman-led Liberal National Party has implemented a fairly aggressive reform agenda within the energy sector, and, thus far, that has resulted in increases in residential electricity prices of over 32.6 per cent, the cutting of about 1,750 jobs from the public energy sector and a reduction in or closure of rural and remote energy services, and of course they have announced plans to privatise all taxpayer-owned generation, transmission, distribution and retail energy assets.

We are highly concerned with these actions, events and decisions in the energy sector, not just the policy decisions that the government has made or the operational decisions of these state-owned energy corporations, but it also involves, as discovered through RTI processes, Liberal National Party donors and their lobbyists.

ERM Power, as Mr Simpson mentioned, is a private electricity generation company that operates in the federally regulated national energy market, where it competes with other public and private generators, including state-owned generators CS Energy and Stanwell.

ERM Power donated $16½ thousand to the Newman government shortly after it was elected in 2012. Five days later, the chairman of ERM Power was appointed as the head of an energy sector review panel by the LNP government, which is what Mr Simpson just indicated. The relationship between ERM Power and the LNP also included Premier Newman officially opening ERM Power's Brisbane office in 2013 and the current energy minister meeting with ERM Power and their lobbyists at least five times, including dinners at the exclusive Queensland Club, since they have been in office.

In addition to this, the LNP has held a political fundraiser in the ERM Power's boardroom and invited an ERM Power director to participate in an LNP political energy and water policy committee at Parliament House.

Alarmingly, it would appear that, based on all available evidence to us, the LNP fundraising dinner in 2013 was not declared in the energy minister's diary—which is the protocol here in Queensland. Also, an ERM boardroom lunch earlier this year in March would appear to have been not properly declared in the Queensland Integrity Commissioner's lobbyist contact log, as is required.

We believe that ERM Power has been afforded what amounts to almost unfettered access to the government. It is far in excess of that of most other energy industry stakeholders—certainly us. It is clear that they have been deeply involved in LNP energy policy discussions and political activities.

Just as an aside, over the same time the commercial performance of ERM Power has been what can only be described as stellar, posting a 32 per cent increase in revenue, which is over $2 billion, and a 263 per cent increase in profits in 2014. That is revealed in their 2014 annual report. We believe that such a close and constant relationship between a government and one of its political donors that appears to be deliberately kept from the public falls well short of the expected public standards of openness, accountability and transparency. We believe that the LNP government's relationship with ERM Power should be thoroughly examined by the committee going forward, using all of the powers available to the committee. That concludes my opening remarks. I will hand over to my comrade Stuart Traill.

Mr Traill : Thank you for the opportunity to appear. As Mr McCallum said, as the organiser for the electricity supply industry, we noted that there was a reduction of 1,750 electricity workers in this state since the Newman government came into power. There are fewer than 750 Energex workers since the LNP came into power in the south-east corner of the state. There are over 400 fewer in Ergon Energy in the regional areas, with a further 595 to go, as identified in their deliverability report to the Australian Energy Regulator—so further significant job cuts. Currently, Ergon and Energex are proposing to cut the apprentice numbers significantly, with Ergon reducing from 280 apprentices per year down to a minimum of zero; and Energex going down to a minimum of 32.

Of the recommendations in the independent review panel's final report, a number have a significant potential impact on this state. Recommendation 23 refers to Ergon Energy depots, with fewer than 15 staff, are at risk of potential closure. That has been accepted in principle by the government, and it is now sitting with Ergon Energy as far as the implementation of that policy. That could potentially lead to the closing of over 40 depots throughout regional Queensland, with the loss of jobs and income for their communities and the loss of the service they provide to the communities.

Recommendation 29, which has also been accepted in principle, refers to the potential privatisation of 33 remote power stations, which are standalone ones, largely in the Indigenous communities throughout Western Queensland, Cape York and Torres Strait. They are all at risk of privatisation, which could lead to significant job cuts, significant increases in the price of electricity to those people and a significant reduction in services.

Recommendation 24 is very pertinent today given that we had the significant storms last night. This recommendation refers to the network service providers taking urgent action to reduce overtime to benchmark levels and review gross pay to base pay ratios. Last night we had 127 crews working through until 11 pm. That is roughly 127 two-person crews for Energex. So it was roughly 260 staff members of Energex. There were over 600 wires down, with 80,000 customers being without supply. Hundreds of Energex employees were available to be called in to participate in the response work, but unfortunately were not. It is our view that the reason they were not is that Energex did not want to pay them overtime last night and again today.

As we speak, on the Energex web site there are still over 40,000 electricity customers in the South East without power. We have ETU members who are unfortunately in depots right now sweeping the depots instead of being out there getting the supply on. This is a result of the sorts of cuts recommended by the government.

We believe this is only a sign of things to come under privatisation or leasing—in the absence of details by the state Treasurer it is the same thing. It is a sign of the times for the future of the state. We are still going to suffer significant storm events in the future and unfortunately there are likely to be further job cuts and higher electricity prices, with a reduction in services to the people of Queensland as the focus shifts from the provision of services to the people of Queensland to the delivery of profits to the corporations and their shareholders.

Senator WATERS: Thank you for coming along today and for your very considered submission. And thank you, Mr Traill, because I wanted to ask about the response to the storm last night, amongst other issues you have raised. You said there were 127 crews out until 11 last night. What happened after 11?

Mr Traill : Between 11 pm and 4.30 there was a handful of crews. I spoke to the Energex manager probably at about 8 o'clock last night to try to get an understanding of what was going to happen throughout the night. The advice was given to me by the persons in control of the Energex response that there would be a handful of crews. I asked him what a handful was and he said there would be a handful across the three hub areas of Energex. The feedback I have is that there were approximately six two-man crews working between 11 last night and 4.30 am this morning. Calls were made during the evening last night to our members who wanted to go out and work—those who had not breached their fatigue levels. The crews that were out at 11 had to go home because they had breached their fatigue levels. The guys who had been home could have been called in. Unfortunately they were not called in, despite being ready, willing and able to come into work, because Energex did not want to pay overtime rates for last night and again throughout today. So, unfortunately, the people of Queensland and the small business owners are still suffering as a result.

Senator WATERS: So 40,000 people, businesses or homes are still without power and there were people who were ready and able to help last night. Did Energex provide any reason why they were no deploying personnel, those who were not breaching the fatigue provisions, to try to help the situation, given that we know we can expect more of these sorts of extreme weather events in future?

Mr Traill : This occurred last week, also. We raised it with Energex and they promised us last week that it would not occur. But it is all part of the cost cutting. Heading towards a state election, these managers are obviously concerned with the threat of privatisation. They are concerned about their own jobs, so they will do whatever they are told. So it was a significant shift.

In the past, they would generally have progressively brought crews in over the night as they got more of an understanding of the extent of the damage. Last night they did not do that, and our members were not allowed to come into work until 4.30. The only explanation for that is: prior to 4.30, the crews would have had to have been paid overtime throughout the morning and then throughout today. It is a bean counter's exercise instead of it being one of delivering a service and response to the people of Queensland.

Senator WATERS: One presumes as well as the inconvenience of losing power that there are safety issues here?

Mr Traill : Significant safety issues—over 600 wires down. There were still 400 wires down being reported by Energex when I headed to work this morning. Every single one of those wires is a life-threatening situation. Energex spends a significant amount of money advertising on educating people to stay away from live powerlines, whilst keeping their employees—

Senator WATERS: Some of the workers can stay away as well!

Mr Traill : Unfortunately, this is a sign of the times for the future if the LNP get a mandate and are allowed to privatise or lease these power assets.

Senator WATERS: I want to come to the lease arrangements but I have one final question on emergency response. You mentioned that 1,750 have been jobs lost in the last couple of years. What impact has that had, cumulatively, on the ability to respond to emergencies such as the one we saw last night?

Mr Simpson : A huge impact. It is a ridiculous situation. In 2004 or 2005, we had a massive storm come through Queensland and wipe out the CBD—and it was out for four or five days in some places. We, as a union, lobbied to get maintenance standards up.

I will go back go back 30 years. In 1985, we had a little industrial dispute—you may have heard of—called the SEQEB dispute, which we subsequently lost. It was all about cutting jobs, slashing the budget and maintenance to try and improve the bottom line. They did that quite substantially. The result of that was that there was no subsequent money spent on maintenance by successive governments—LNP and Labor—for many years.

In 2005, we had a perfect storm, if you like. The maintenance levels were so bad that the things were just about falling down. The storms that hit were fairly severe and took them all down. We lobbied particularly hard and got a thing called the Somerville inquiry up and running. It was chaired by a guy by the name of Darryl Somerville—I cannot think which company he was with now. It was a tripartite committee that went around and looked at the maintenance level; they physically went out and saw the standard of the poles and wires in our state. As result of that, they put a pretty scathing report back to the government saying it was just about to fall over and the government needed to spend billions and billions of dollars on it—which they did. Thankfully they did, because, with an event like last night, instead of being two or three days would have been about two or three months in some areas. It was that bad.

One other concern is reliability standards, which, under the Somerville regime, were N-1. I will not go into why it was N-1, but that is a standard that engineers set that the network should be maintained to. One of the first things that triggered me writing to the minister for water and energy when he took over back in April 2012 was he was flouting to the public that he was going to reduce those standards. The best analogy I could probably give you would be: you currently have a car that is supposed to be serviced every 10,000 kilometres. Under the regime that Mark McArdle was proposing you do it every 30,000 kilometres. You can get away with that for a couple of years probably—depends how you drive a car—but eventually it is going catch up with you. Instead of buying five litres of oil every three or four months, you are going to have to get a whole engine rebuilt. That is pretty much where we are heading back in this state now, because, since that was implemented—he has implemented it now—the reliability standards have been lessened. People are going to have more and more blackouts. There are fewer staff now to go out and maintain—not that the maintenance is getting done—or fix the powerlines that do fall down.

We keep hearing this tag 'goldplating'. I have been in this trade all my life. I came out of school pretty much and became an overhead linesmen, later a live linesmen, a delegate and then went off on the union path rather than staying in the trade side of it. We are very proud of our industry. We are very proud of our trade. We are very proud of our craft. When things are not maintained properly, they fall down. That sounds all well and good—a bit of copper wire hits the ground. But sometimes that bit of copper wire is carrying 66,000 volts. If the protection is not maintained, it stays live on the ground—it does not just trip out—and can kill people. We have had numerous instances over the years of workers being killed, members of the public—kids—being killed because of those reliability standards not being in place. When they were finally put in place—and we started moving in the right direction—the chances of that happening lessened. Now we are going back the other way. It is a retrograde step, but that is the reality of it. To answer your original question: without suitably trained staff on the ground to do the job, more and more storm events, like last night, are going to get worse and worse and the response times are going to get greater and greater.

Senator WATERS: I want to take you to one of the statistics that I think you, Mr McCallum, mentioned in your opening statement about the fact that, since the election of the Newman government, there has been a 36.2 per cent increase in residential electricity prices. Can you give your views on what you think is driving that increase?

Senator CANAVAN: The carbon tax!

Senator WATERS: Maybe, Mr McCallum, you might share your views rather than Senator Canavan.

Mr McCallum : Only 48 hours ago, there was a report that was released by the Australian Energy Regulator that basically looks at all of the residential electricity prices in all of the jurisdictions in the national electricity market. Queensland had the highest increase over the period, which was basically 2013. Last year alone, there was a 22 per cent increase. The report concluded—and anyone who wants to look at the AER website can grab this report—that the policy that the Newman government implemented upon being elected, which was to freeze tariffs for electricity prices for 12 months, resulted in electricity price shock by effectively holding over what would have been a 12-month increase for another 12-month period. So, last year, Queensland consumers were slugged with a double whammy: basically, two years worth of electricity price rises—that was 22 per cent. In our view, at the time—we have made lots of public statements in this regard—we regarded it as energy policy vandalism. It was ill-considered, populist and completely impractical. That is one of the main drivers with regard to the soaring electricity prices that we have here in Queensland, and it is an extremely unfortunate set of circumstances.

Senator WATERS: I want to go now to the proposed leasing arrangements, which you say are 'privatisation by another name'—I personally agree, as do, I am sure, many people, but that is irrelevant for these purposes. You reference the fact that similar leasing arrangements have been in place in South Australia, and you say that this has led to producing the highest power prices in Australia, with job cuts, overseas ownership, maintenance issues and leaseholders requiring network assets over time. If we have learnt some lessons from that experience, why is the government proposing to do the same thing? Do you think that the same outcomes will eventuate under the LNP's plan for Queensland?

Mr Simpson : Most certainly. I have written to the Treasurer twice. The first time was on 21 October, from memory, and the follow-up one was in November. We got a copy of not the lease documents—obviously, they are probably commercial-in-confidence, like everything interesting is—but certainly the legislation and regulations that underpin that for when it is sold. They make no bones about it in South Australia that a long-term lease is a sale. Jeff Seeney himself actually said it in 23 March 2010, I think, in Queensland parliament in relation to the Bligh asset sales. A long-term lease is a sale; we know that. In South Australia, the terms and conditions of the 99 year lease that they did with the old electricity trust of South Australia are that, if the new operator or owner, if you like, works at any part of that network during that 99 year lease, that becomes their property. If they build any new lines, that becomes their property. Regardless of the stupid fact that my grandchildren will not live to see them come back into public hands, at the time they did, if they lived that long, it would not be theirs anyway, and they would have to buy it back. Tim Nicholls, the Treasurer here, basically made that concession the other day on Channel 9 news when he was asked a question about it.

These are pretty fundamental issues that go to the heart of this whole privatisation agenda. You would have seen the massive amounts that the state government is spending on advertising saying, 'We are not selling assets'—even the grocer says, 'No asset sales;' I thought they were a part of their campaign at one stage. They are out there selling that to the Queensland public. They are spending millions and millions of taxpayers' dollars saying 'save' but, when we ask one simple question about the details of the lease and how that will operate over the next 99 years, we do not get a response. I think Queenslanders need to have that response to make a value judgement, come the next election. If they thought that they have neutered the argument about asset sales, they certainly have not from our side. An asset lease is a sale, and Tim Nicholls has said as much in parliament, as well, prior to this, in the Bligh years. So it is scary stuff, Senator.

Senator WATERS: Staying on that issue, you mention in your submission that there appears to have been quite a lot of progress made towards these long-term leases already, despite the fact that the Premier had said that he would take this issue to the next election—and I believe it should indeed go before the people. Can you just walk us through what has already been done in relation to facilitating these long-term leases before we have had the election?

Mr McCallum : Sure. This is only what we are aware of, and we suspect that this is probably only the tip of a larger iceberg. We are aware that scoping studies were undertaken last year where financial firms were appointed at that time to investigate the possibility of a 50 per cent equity sale in certain Queensland energy owned businesses. However, since that time, we also understand that—and this is via various media reports and what we can find out around the place—up to $300 million of taxpayer money has been set aside for financial services and consulting fees associated with preparing for the privatisation of our ports and energy companies. What concerns us is that there seems to be this disingenuous action by the government where they are out there making a virtue of the fact that they are going to go to the next poll and seek a mandate, when really they are preparing right up until the point where they are ready to pull the trigger. They have loaded the gun, and they are going to be ready to fire it, if they win the next poll, the minute they are returned. We think that that is not befitting a government when it comes to its dialogue with the taxpayers of Queensland.

Senator WATERS: In relation to the donation from the company of which the head subsequently became the head of the inquiry, if you are following me—Tony Bellas is the chap's name; his company made a donation, and then, five days later, he was appointed as the head of this inquiry—was that donation disclosed at the time that he was appointed to head that inquiry?

Mr McCallum : The short answer to that is that I do not know, because I do not know at what point that disclosure was put on the Electoral» Commission of Queensland's website. I would be surprised if it was that expeditious process—that, five days after the donation was made, that was declared. I am referring to the disclosure document from the «electoral» commission. It indicates that the date it was received was 23 August. Given that these events occurred in May, that is some months afterwards.

Senator CANAVAN: At the outset, I want to ask this: I know you have had a fraught relationship with the Labor Party in the past, but for today's hearing and the evidence you provided and the submission you provided, did you at all meet or discuss the evidence in that submission with the Leader of the Opposition, Annastacia Palaszczuk, or her office?

Mr Simpson : We are well aware of the terms of reference and the procedural «matters that go with a Senate committee such as this, and we took time to go off and get legal advice on that. No, we have not shared this submission. We have certainly shared the RTI material, though.

Senator CANAVAN: That was not quite my question. Did you have any discussions with the Leader of the Opposition's office in preparing the submission?

Mr Simpson : We spoke to a range of people about the submission and what was in it. We spoke to people about the RTI material, yes. I cannot recall off the top of my head whom we spoke to in all cases, but certainly we would have spoken to someone in the ALP, I am guessing, on the way through.

Senator CANAVAN: But you cannot recall if you have or have not.

Mr Simpson : I cannot recall who it was. This has been compiled; this has not been Peter Simpson sitting in a room doing it. It has not been Lance McCallum sitting in a room doing it. It has not been Stuart Traill doing it. It has been an amalgam of people and a lot of resources to go off and chase the material down. There have been several discussions—maybe Lance can, from his side, writing the submission, throw something in. I cannot, off the top of my head, think of anyone else.

Senator CANAVAN: Mr McCallum, did you speak to the Leader of the Opposition's office?

Mr McCallum : Most of my discussions with a range of other organisations and stakeholders have been in relation to the information that has been discovered via the RTI document. As Mr Simpson has indicated, we have told those stakeholders. It was a part of those discussions that we intended to make a submission to the committee, which we have subsequently done.

Senator CANAVAN: Did you personally have any discussions with the Leader of the Opposition's office?

Mr McCallum : No.

Senator CANAVAN: I just want to clarify this. My understanding, Mr Simpson and Mr Traill, is that you were suspended from or left the Labor Party ahead of the last Queensland election?

Mr Simpson : I was thrown out of it.

Senator CANAVAN: Thrown out? I am going somewhere with this line of questioning, Chair. Are you now members again?

Mr Simpson : Yes, we are.

Senator CANAVAN: You are back again. Just bearing on these issues about asset sales: recently the former Labor Minister for Resources and Energy, Martin Ferguson, gave a speech. I am not exactly sure where. In that speech he said, 'I'm proud to stand before you today to lend my support to the restructure and sale of the New South Wales and Queensland electricity grids.' He went on to say: 'The continued public ownership of the New South Wales electricity network serves the public interest very poorly indeed. In the 15 years since privatisation, Victoria's electricity consumers have enjoyed the lowest electricity price rises. Twenty years of experience shows that public ownership has harmed, not helped, consumers.' Do you believe Mr Ferguson? You have presented some evidence on price rises. Do you think the evidence he has provided there is incorrect?

Mr Simpson : As far as the Victorian price rise—you have researched this.

Mr McCallum : I think the key to the answer is that Mr Ferguson referred to enjoying 'the lowest price rises' not 'the lowest prices'. If you look at privatised jurisdictions, I referred to a pricing report from the national regulator in one of my earlier remarks. That had South Australia, which is a privatised network that has leasing arrangements such as those proposed for Queensland, as the highest state in the country when it comes to electricity bills. It has been a well-known fact in multiple and numerous reports that have put the prices in Victoria higher than those in public states, on average, depending on where the pricing cycle is in any given jurisdiction. Simply saying that the prices have not risen as much as elsewhere forgets to mention the base at which the prices were to begin with. To go any further we would have to know what period he was talking about. Was he talking about only network charges? Was he talking about generation charges? What about the retail sector et cetera? I really cannot assist you beyond that.

Senator CANAVAN: Do you think, then, that if we were to lease or sell assets here in Queensland, just like Victoria, we would have lower price rises than otherwise?

Mr Simpson : I can tell you what you would have in Victoria. You would have half the workforce, for a start, because that is what happened in Victoria in 1995 when it was privatised. It halved the workforce, and it took 10 years to employ one new apprentice in that place. If you go to the Latrobe Valley, as I have, and witness firsthand what has happened to the place, it is a ghost town, literally with tumbleweeds going down it. I would have thought people who supposedly represent the bush would have been of a different mindset to that, especially in regional Queensland. I come from regional New South Wales. I was born and bred there. I have a bit of a passion for seeing what governments can do and do do to regional communities. You gut the workforce. You cut the Queensland workforce in half—which is what they are going to try and do, I can assure you of that—and you cut apprenticeships. That has already started to happen as a result of this independent review panel. What you end up with is less service. We have already seen the result of that last night and again today. You see people going longer without power. You see more people getting killed as a result of bad maintenance, and you see fewer of our kids getting trained.

Senator CANAVAN: Mr Simpson, I know you have to represent your members, but you probably would appreciate the position of ministers of both Labor governments, which have privatised assets, and coalition governments, which have. We would love to have more people employed in these sectors, but every additional person employed does increase costs and ultimately will make for higher electricity prices. Do you reckon there is a point that we cannot just consider how many people are employed in the electricity sector; we have to balance that against the need for an efficient sector and efficient electricity prices?

Mr Simpson : Contrary to popular belief, trade unions do not want people sitting idly by just for the sake of employment—certainly not our trade union, anyway. When I am talking to a farmer out the back of Quilpie or St George or Cunnamulla who has a three-hour drive from town for the existing staff that are in those locations to fix a pump, which waters his cotton, when it goes down, I do not disagree with him on any other political point except privatisation, where he says: 'I like the way that the guys are in town and they can come out and fix things when they're broken. They can come down and turn the power off before it starts bushfires, and that sort of stuff.' Those people are essential to be able to have response times. Sometimes they are two or three hours in the bush, because that is literally the drive you have to do to get there. When you start taking those resources out, which this independent review panel talks about doing, any depot with less than 15 staff—what is it, 38 depots across Queensland were closed?

Mr Traill : Forty-four depots.

Mr Simpson : Forty-four depots in Queensland were closed, and they were all in regional Queensland. There is not one of them in the CBD of Brisbane; there is not one of them in Mackay or Cairns or Townsville. We are talking about regional Queensland—there, where they are suffering. We are not top heavy with staff, trust me. The C1750 cost the industry—they have walked out the door in the last two years, mostly with redundancy packages. They were not thrown out the door—they all took their money and ran, and I can understand why they would want to, seeing what the future holds. Those sorts of numbers cannot be allowed to leave this industry, if we are to keep a sustainable, safe and reliable electricity network, and that is where we are right now. We are right at that crossroads now, where a couple more will be the tipping point.

Senator CANAVAN: Just to change tack: you said earlier that you were thrown out of the Labor Party ahead of the last election—

Mr Simpson : Proudly.

Senator CANAVAN: Proudly. And my understanding is that that was primarily because—

CHAIR: Beware of relevance!

Senator CANAVAN: you were unhappy with the change in the policy with regard to electricity privatisation by the Bligh government. Given that that policy was not announced ahead of the 2009 election, do you have any more confidence that they would not change their policy again after this election, if the Labor Party were to win?

Mr Simpson : I have every confidence.

Senator CANAVAN: So the Labor Party has reformed—they have changed?

Mr Simpson : I do believe they have, actually. I do believe in all sorts of things, and it is one thing I do believe in. The Queensland Labor Party as it stands now, and the members and candidates that I have met, and in some cases have worked with for many years, are decent people. They are decent, hard-working, working-class people who are working their way up through the ranks. They are not the same ilk as some of those who were leading the place before.

Senator CANAVAN: There are many recycled candidates, but I am glad to hear that. The Courier-Mail reported earlier this year that a number of unions were funding the case against bikie laws. I believe the Maritime Union of Australia admitted to that. There was also a $10,000 donation from a group called ETU Boys. Who are those boys?

Mr Simpson : It is my officials. It is not union money, and it was misreported in the paper. I took great exception to that. No union money went towards that, but we did donate $10,000. Officials of the Electrical Trades Union put $10,000 into that fund.

Senator CANAVAN: When you say 'officials', what does that mean?

Mr Simpson : Elected officials. Us. The guys at the—

Senator CANAVAN: Okay. So you personally, Mr Simpson and Mr Traill? You helped to fund that?

Mr Simpson : That is right.

Senator CANAVAN: And that was to the order of $10,000?

Mr Simpson : Ten thousand dollars.

Senator CANAVAN: Was that the case that was recently decided upon?

Mr Simpson : No.

Senator CANAVAN: The funding that went to—okay, what was that?

Mr Simpson : Sorry, in relation to the bikie laws?

Senator CANAVAN: The High Court one that was recently—

Mr Simpson : Yes. The High Court challenge, yes. All we did was make a donation to a central fund. What happened with it after that, I do not know. But that was certainly the cause we donated to.

Senator CANAVAN: All right.

Senator IAN MACDONALD: How many bikie boys are there?

Mr Simpson : I beg your pardon?

Senator IAN MACDONALD: How many bikie boys are there?

Senator CANAVAN: ETU boys.

Mr Simpson : Bikie boys? There would be quite a few, I would imagine!

Mr Traill : That was probably when you were on the phone. You missed that one.

Senator IAN MACDONALD: Or when I was sort of dozing, perhaps, because I had heard all of this before. But how many in the ETU Boys? What is the number?

Mr Simpson : About 25 contribute to a fund. We always have. It is not a slush fund; it is registered through ASIC. You are welcome to check it any time you like, Senator. You can Google it.

Senator IAN MACDONALD: The ETU Boys?

Mr Simpson : No, that is not the name of it. That is why I said it was misrepresented in The Courier Mail.

Senator IAN MACDONALD: What is the name of it?

Mr Simpson : It is the ETU Officers' Defence Social Club. I cannot tell you the ASIC number off the top of my head, but you can Google it.

Senator IAN MACDONALD: I will Google it, thanks. Sorry, Senator Canavan.

Senator CANAVAN: You mentioned earlier that I think it was the Queensland Attorney-General had some correspondence with you. Do you have a copy of that letter to table to the committee?

Mr Simpson : I'm not sure if—was it Mark McArdle, the energy minister?

Senator CANAVAN: Was it Mr Mark McArdle? Sorry.

Mr Simpson : I have, actually—I did bring it.

Senator CANAVAN: Can you table that letter?

Mr Simpson : I only brought one copy of both—to and fro—but I can hand that up, if you want.

Senator CANAVAN: Thank you.

Mr McCallum : At this point I might table a copy of our submission, just for completeness's sake, as well. Thank you.

CHAIR: We have accepted it, I think, already.

Senator LUDWIG: What was the letter from Mr McArdle about?

Mr Simpson : That was in response to my original letter, where I wrote to him. They were elected in March—give me a couple of weeks either side of this—and I wrote to them in April when there were some reports in The Courier Mail that they were going to lessen reliability standards in the network. I went into it extensively when I was answering Senator Waters' questions. Obviously, we had major concerns about it. We had just spent the last five, six or 10 years building the industry back up to where it needed to be, and what McArdle was talking about doing was stripping that all away and going back the other way.

So I wrote to McArdle and I said, 'Listen, we've got some buy-in in this industry; we are a stakeholder.' I am paraphrasing again, but the letter is there. 'Here are some cost savings straight away that could be made. We are happy to sit down and talk to you further about the issues going forward.' I got a one-page response—I think it was three or four paragraphs. Again, paraphrasing: 'You're a union. You back these shitty Labor governments. Go away.' That is the way I read it.

As a subsequent response there I gave them more detail and said, 'Let's not play stupid politics; let's just talk to the issues.' And I did not get a response to that letter.

Senator LUDWIG: You are also concerned about what they are doing currently in a range of the depots. As I understand it they are also not keeping transformers in depots where they otherwise would, which means that affects the time it might take, particularly in rural and regional areas, if a transformer blows up and you have to find a replacement. If you do not have that transformer in the depot then it has to come up from—

Mr Simpson : A central warehouse somewhere, yes. A lot of them have gone to central warehousing—particularly Energex and Ergon—and just-in-time substations. They might keep two or three transformers in stock in Brisbane, a couple in Townsville and a couple in Cairns. But if you are in Thargomindah and your transformer to your pump blows up, that is 300k to the local depot. The closest depot would be at Cunnamulla or St George. They would not have one of those, so it has to be freighted out. Those are massive delays, but the way that they see it, it is a cost saving.

The other big issue—especially today as well—is that Energex used to have a service that would go out when they had planned outage in your street or you if were a small business. They would hook a generator up at no cost to keep you going, so you would not lose supply. That has been axed. Stewie knows the exact amounts that they reckon they have saved but that was a service to the community, and as a government owned corporation we should be about service. We would go out and make sure that local business—that local pie shop—had supply if you were doing a Sunday outage. That has gone as well now. So it is not just the material stuff; they are cutting back on all of the services—the ancillary services we used to provide as energy providers in this industry. That has not been reported widely, but I can assure you that there was a bakery—where was it?

Mr Traill : It was up in the Kelvin Grove area.

Senator LUDWIG: All that means, though, is that service delivery to customers is going down in terms of the ability to be able to respond—times and waiting for power to be reconnected. We would be experiencing that now: if there were only six crews on between 11 and 4.30, then presumably they had to start post-4.30. So for all the work that could otherwise have been done it means that by the end of today there will still be people without power who would otherwise have had power.

Mr Simpson : And they were out there this morning saying that it was a safety issue and that they could not do it. I have worked in this industry, as I said, since 4 February 1980—as a tradesman up until 1997. I have patrolled more power lines than most of them have had hot feeds—although I've had a few hot feeds myself, but to tie in with the previous speaker! You can patrol lines at night; you can fix lines at night—there are lights, there are safety procedures in place. As Stuart said before in his opening address, when a powerline falls on the ground you need to know that it is de-energised. You cannot just assume it is de-energised because a lot of the time they are not. You need people out checking that sort of stuff—physically on the ground. There is no magic board that Energex consults that says 'Senator Ludwig has just lost his power at 3 Smith Street.' You actually have to physically go there and check it out. That did not happen last night, and that is part of this service decay that has happened over the last two years.

Mr Traill : It did not happen last week either, I was talking with some of our members out at Raceview the other day. One of the on-call supervisors rang around after the storms last week and he could not get enough staff because 750 have already been cut out of Energex since the LNP government came to power in Queensland. There were not enough staff last week. He actually had to rely on the apprentices to come in to offset the tradespeople who just are not there any more. These are the apprentices who are proposed to be slashed as well. This is only the start of the rot if the LNP get their way and privatise or lease these assets.

Senator LUDWIG: And with this 99-year lease, your view is that this will get worse or much worse?

Mr Simpson : Much worse.

Mr McCallum : The evidence from other states, such as South Australia, has suggested—and has given us every reason to suggest—that that is going to be the case. You mentioned the storms last night. As someone whose own home—mine as well as thousands of other people—was affected, I left home this morning without the power on. I will get back tonight and, hopefully, it will be on. I will check to see whether food has gone off in the fridge et cetera. It is very disappointing for me to know that not everything has been done by Energex to get it on that could have been done. It is even more disappointing for me to know that that is linked to directives from the government as cost-saving measures.

Senator LUDWIG: I just want to go through the issue in your document which goes to shutting down units before summer. I just do not quite understand why you would do that.

Mr Simpson : Neither do we!

Senator LUDWIG: What is the thinking? Do you have a view as to why they were shutting down units in the lead-up to—

Mr Simpson : I cannot categorically say why, but a baseload power station is exactly that—it is there to provide constant, consistent baseload power over the whole network. It is not a peaking station, and it is a lot cheaper to run baseload station than a peaking station. Why you would take out 750 megawatts of generation capacity just before summer, I have no idea. I have said publicly many times that this government has got no idea of how to run an electricity network. They have proved that, because they shut those two units, they kept everything else going and they used Swanbank E Power Station, which is a gas fired power station, until the gas price peaked. They then came out and said they were going to mothball the gas fired power station. They sacked 35 staff and then ramped up those two units at Tarong, which have subsequently been raided for spare parts, and they would have to get parts from Germany and various other places. Economically, managerially, common-sense wise, none of it makes sense.

Senator LUDWIG: And they have extended the closure for the one in Ipswich now too. They originally said it was going to close earlier; now it has been extended. Is that the reason: because they cannot—

Mr Simpson : Because gas prices fell. There are two reasons, I believe. The gas prices went back through the floor again and they realised they could not ramp up the two units at Tarong as quickly as they wanted. We are currently in litigation with them over the Tarong shutdown. They said when they put those two units back up again that they would not employ any new staff, and they sacked 65 people, I think, when they closed those two units.

Mr McCallum : I might quickly add that, in reference to taking away baseload capacity just before the summer peak, we found it very curious that government owned generators would reduce their output, because that gap, if you like, in demand has to be taken up by the private generators. It was during that period, just before the summer peak, that prices were upwards of $12,000 per kilowatt hour. The government takes away some of its capacity; private providers come in and take that up.

Senator LUDWIG: And the beneficiary is the ERM.

Mr Simpson : I would suggest they are a fairly big beneficiary, yes.

Senator KETTER: Thank you, gentlemen, for coming forward. In your submission—and you touched on this in your remarks—you talked about huge job losses and service reductions across the government energy sector. Are you able to elaborate on that, provide a bit more detail on what this means for both workers and the public?

Mr Traill : Prior to moving to Brisbane in January, I spent 35 years living in Cairns. I grew up there, did my trade as an electrician and worked for the electricity board, which then formed into Ergon, and participated in a large number of cyclone response activities when I was on the tools.

Without that number of staff—750 less in Energex and 1,750 across the state—there is a massive impact in relation to response times and service standards. What we are seeing in Far North Queensland is that, with the last cyclone that went through Cooktown, the staff could not get in because the Bruce Highway was flooded. So they fly crews in without trucks, and it is nothing more than a political statement. The government comes out and says, 'We've flown people in from Brisbane to assist,' whilst they sit in the depot with no ability to do any work. We are seeing a significant reduction in service standards, response times.

The first few hours after a storm like last night's are critical. You want to get your crews out, make safe, fix up the major safety issues, isolate the wires, get them off the roads, and earth them so they are safe for people to be around. Then you start getting the backbones of the network on—hospitals, sewage system, water, all the traffic lights—so people can get back to some level of normality. Last night is a classic example. Without those numbers of staff being able to respond and not being brought in because of restrictions on overtime, people suffer. I was talking to a lady this morning in a coffee shop across the road from our office who was saying how disgusting that was, because she had a number of elderly neighbours that had health issues and that could not access the medication and treatment they needed because they had no electricity this morning. She was horrified to know that between 11 pm and 4.30 this morning there were 12 people out there restoring supply.

Senator IAN MACDONALD: How many crews is that?

Mr Traill : Generally after a storm response, you have two people per truck, because if you are out there doing high-voltage switching isolation—

Senator IAN MACDONALD: Six crews?

Mr Traill : A handful of crews.

Senator McGRATH: I think you are wrong with that. I think I have figures from Energex that at 11 pm last night they had 123 crews out, at midnight they had 78 crews out and it did get down to 40 crews at 4.30 this morning. I think the information you are putting here is misleading and I think you should be very careful in terms of the information you are giving to this committee.

Mr Traill : That is not what I was told by the Energex representative—

Senator McGRATH: What, by the lady in the coffee shop?

Mr Traill : It was not the lady in the coffee shop—

Senator McGRATH: An informative source—the lady in the coffee shop.

Mr Traill : Excuse me—you asked me a question and I am happy to respond.

Senator McGRATH: You are putting wrong information out there.

Mr Traill : The person I spoke to last night was the Energex representative in control of the response activities—Mr Paul Rainbird.

Senator IAN MACDONALD: Would you be surprised if we had information from Energex that completely disregards and challenges your information, which I suspect is typical of a lot of the information you have given. It is just something you make up on the spur of the moment. .

Mr Traill : Senator Macdonald, it is not made up. The information that I have provided was based on—

Senator McGRATH: It is wrong.

Mr Traill : Energex, Ergon and the government have made many misleading statements on fault response over many years.

Senator KETTER: I would like to move on to that part of your report which refers to the independent review panel report and its recommendations. The panel was chaired by the same gentleman who was the chairman of ERM Power. What are your views about the legitimacy of that arrangement and the report itself?

Mr Simpson : We did not think it was legitimate from the start. For a start, if you are going to put something together, you come and talk to all the industry stakeholders. Whether you like trade unions or you do not like trade unions, we represent 4,500 people in the electricity industry, so I suggest we have a reasonable idea of what goes on around the place. All of us in this section have come up from the shop floor—we have worked as tradesmen ourselves and we know the industry inside out. I was not aware at that stage that Tony Bellas was with ERM Power—I think that came out subsequently. I had had previous dealings with Tony; I found him a reasonable guy to deal with. I am not having a personal sledge at Tony Bellas in any way, shape or form.

The committee got up and running and we read the scope of the committee and saw the process that it was following, but I only got one meeting for about half an hour during that whole time. When I put it onto them about the privatisation they said it was not in scope, they were not even considering it, yada yada yada. Then it came out as one of the main recommendations. I think that pretty much answers your question, for mine. It did not have too much credibility towards the end. Originally we did not throw too many stones at it because we thought maybe Tony would make sure the rest of it was pretty transparent, but I think there were other moves afoot from inside the government, more particularly, to make sure that the thing was pretty much written before they kicked off. Like I said, privatisation was not to be considered—it was not even in the scope of the committee's dealings but it ended up one of the key recommendations. For me, that explains it.

Senator KETTER: I also make reference to ERM Power and that a director of the company was invited to an LNP energy policy committee, which seems extraordinary. Can you take us through that?

Mr McCallum : You have taken the words right out of my mouth. It is absolutely extraordinary. There is an attachment to our submission which is a document obtained under freedom of information that indicates that from the energy minister's office, via one of the administrative staff who works there, there was an email sent to a gentleman, I believe one of the founding directors of ERM Power, inviting him to a party political policy discussion on energy and water. What is a little bit strange is that I do not believe we have ever been invited as an energy industry stakeholder. I am not sure what other energy companies, whether they be generators—

Senator McGRATH: Maybe if you were not protesting all the time—

CHAIR: Order! You do not have the call, Senator McGrath.

Mr McCallum : It is absolutely extraordinary.

CHAIR: Someone mentioned apprenticeships and the lack of positions. What sort of ramifications will that have in the future?

Mr Simpson : I started in this industry up here in 1991, having come from Canberra, as you know. I saw how bad it was—I think there was one year when Energex put on 10 apprentices, but most years before that there were none.

When we had the campaign in 2004-05, we got some decent ratios in place. We were getting two, three, four hundred kids every year into apprenticeships. This industry—and I think even the employers if they were allowed to talk to you would give you the same detail—is a ten-year cycle. We ramp up to where we need to be, and then the LNP get in, or someone decides they have got a smart idea and cut the guts out of it. Then we go back up again: now we are talking about no apprentices or very few apprentices in the next couple of years.

That has devastating effects for regional employment, obviously—where do your kids get trained? We used to have a body Queensland rail that used to train a lot of kids, Qbuild that used to train a lot of kids. Successive governments have got rid of both of those, unfortunately. The power industry is probably the last one left. Telstra used to be out in the bush, the Commonwealth Bank used to be out in the bush. Ergon Energy and in some towns Energex are the last two standing in that space. Take them away, privatise them—there will not be any place to train your kids. And what happens then? Unemployment, crime—off we go from there. That is a whole different subject. It hurts me that people are looking at that side of it, it really does. It is just tunnel vision.

Mr Traill : If I can just finish off on that one: the linesman trade is a hard job. It is a hard job on the body, generally. Linesmen past 45 to 50 have either got dodgy shoulders, dodgy knees, dodgy backs. It is a trade that needs an ongoing secession process such as the training of apprentices. Without those apprentices, there is going to be significant reduction in service levels, because right now those apprentices who are currently employed and about to be slashed in future years if they get their way, they are not going to be there. In places like Ipswich, there is over 20 per cent youth unemployment; Far North Queensland in the Cairns area, 21, 22 per cent youth unemployment. Where is the commitment and where are the future opportunities for our children as they leave school?

Mr McCallum : I would just quickly add as well, in the latest figures from the federal Department of Employment, it lists electrical line workers as one of the occupations that is currently in shortage.

Senator IAN MACDONALD: Just on ERM Power and the donations to the LNP, so you say, are you aware that ERM Power has also donated to the Labor Party? Did you make any complaint about that?

Mr Simpson : I did not make a complaint about it; I said that it was curious that they make a donation and then five days later they get a chair spot on the independent review panel.

Senator IAN MACDONALD: Thanks for that. Just going back to your contribution to help overturn the bikie laws, have any of you ever been members of any bikie organisations?

Mr Simpson : I was a Boy Scout once, Senator. That is pretty much my involvement.

Senator IAN MACDONALD: Is that a no?

Mr Simpson : That is a no.

Senator IAN MACDONALD: You said in a media release in January this year that the Queensland government anti-bikie laws would affect 200 ETU members. What does that mean? Does that mean your members are associated with outlaw motorcycle gangs?

Mr Simpson : It means that I have got members; however, under the regressive—and some would say fascist—laws that were put in place under the VLAD legislation, I have got members, as most other unions do, who ride motorcycles on weekends and used to congregate in groups of three or more, that would lose their jobs as a result of the ridiculous laws that were put in place by the Attorney-General in Queensland.

Senator IAN MACDONALD: Thanks for that. I am aware Mr McCallum has been a Labor candidate. Has anyone else been a Labor candidate?

CHAIR: What is the relevance Senator MacDonald?

Senator IAN MACDONALD: It is the relevance of the veracity that you would place on the evidence that they are giving.

CHAIR: I would not think so. What relevance is there to what we are discussing here about whether or not they have been—

Senator IAN MACDONALD: Perhaps it is politically tainted.

Senator McGRATH: Everybody who comes along here is obviously in the Labor Party or the Greens or wants to join the Labor Party.

CHAIR: That is not true either, Senator McGrath.

Senator CANAVAN: A point of order. Just on that ruling, we have heard continual evidence in front of this committee of a political nature. There is no dispute about that, and that is fine. But therefore Senator Macdonald's question is perfectly relevant, because you have to consider—

CHAIR: No, it is not. You do not have a point of order. I am going to wrap this up.

Senator IAN MACDONALD: Mr Chairman, you have given Senator Ketter, Senator Ludwig and Senator Waters—all from the Labor party—about three quarters of the time—

CHAIR: I am sorry. Further questions can be put on notice. Thank you very much, gentleman, for your time.