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Tuesday, 30 May 2006
Page: 27

Mr McGAURAN (Minister for Agriculture, Fisheries and Forestry) (4:03 PM) —I well understand the concerns that people have about the privatisation of Snowy Hydro. But once the New South Wales government’s decision to sell its 48 per cent stake was made, it was inevitable and unavoidable that the Commonwealth would also have to sell its 13 per cent stake. The retention of a 13 per cent share in a commercial company by the Commonwealth is not practical nor fiscally sensible. It is too small to have an impact. I think the Labor Party’s shadow minister for finance put it extremely well here in the chamber on 30 March this year when he said:

In my judgment, the key issue for the Commonwealth in this instance is whether there is any merit in retaining 13 per cent of a major organisation, Snowy Hydro. In my assessment, that fact alone makes it relatively pointless to oppose the sale of the holding, because 13 per cent is simply not enough to allow the Commonwealth to influence the decisions of the organisation in any material way, and I think it is a very unlikely scenario that any government would commit to buying the current shares that are going to be put on sale by the New South Wales and Victorian governments.

Consequently, concerns about the sale have been overridden by the determination of New South Wales to sell its majority stake whatever the position adopted by the Australian government.

The water security issues loom large, rightly. We are confident that security is there for irrigators, regardless of ownership. That security is governed by the Snowy water licence, which was issued by the New South Wales government. It was developed by the Australian, New South Wales and Victorian governments at the time of corporatisation, specifically to protect security. It guarantees the volumes for irrigators. While it is true that it is technically open to New South Wales to seek to vary the conditions of the licence, there is a massive disincentive deliberately built into it for the New South Wales government never to consider doing that. The terms of the Murray-Darling Basin agreement mean that any reductions to Snowy Hydro releases would be deducted from New South Wales water allocations. No government would dare do that, politically or economically—or, if it did, it would suffer the political odium.

The issue of environmental water is also of great importance. Releases of water for the environment—up to a 21 per cent increase in flows has been agreed—are also protected by the terms of the Snowy water licence. There is a qualified commitment by Victoria and New South Wales to return another seven per cent, around another 84 gigalitres, post-2012 to take environmental flows to 28 per cent. The responsibility for recovering and paying for that additional water rests exclusively with the New South Wales and Victorian governments. That is in black and white in the implementation deed, and they have recently committed to setting aside some funds from the sale to do that. Water For Rivers, the body set up by the three governments to undertake that environmental water recovery, is increasingly confident that it can meet the 21 per cent target on time. I think we will be seeing some more announcements on that pretty shortly, which will also deliver some more water to the Murray.

The timing of the release is also of great importance to irrigators. Here the Murray-Darling Basin Commission, Snowy Hydro and New South Wales government representatives have met several times to progress outstanding issues relating to water management that have been raised in this House, within the government and by the President of the Murray-Darling Basin Commission, the Rt Hon. Ian Sinclair. The parties are working towards finalising an agreement that will assist the Murray-Darling Basin Commission in managing the timing of releases from the Snowy. I am confident that we will see a sensible set of protocols to ensure that the timing of the release of the guaranteed volumes is to the satisfaction of irrigators and communities rightly concerned about environmental water flows.

With regard to foreign ownership: this has been touched upon in this House, not least of all by the Prime Minister. He has set a number of conditions over and above the normal foreign investment approval processes that give comfort to those who are concerned that Snowy Hydro would be dominated by foreign interests. Given the shortage of time available to us to pursue this matter, I seek leave to continue my remarks at a later date so that the debate is not closed today.

Leave granted; debate adjourned.