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Tuesday, 7 June 1994
Page: 1409

Senator SHORT (5.20 p.m.) —Mr President, the Moomba-Sydney Pipeline System Sale Bill 1994 provides for the sale of the Moomba-Sydney gas pipeline. This matter has a long and chequered history. The sale was first flagged five years ago at the 1989 budget and expressions of interest for the sale were sought as long ago as December 1989. The Senate will recall that the Hawke Labor government decided to adopt a crash approach to the sale.

  At the budget sittings in 1990 the government introduced the Pipeline Authority (Charges) Bill which sought to increase haulage charges by no less than 56 per cent in an attempt to increase the value of the pipeline. That bill also attempted to break two legally enforceable contracts into which this government had entered many years earlier. The first was a contract between the Pipeline Authority and its users on charges. The second was a first right of refusal agreement between the Pipeline Authority and the AGL company, from which the pipeline had first been commandeered and nationalised back in the 1970s.

  That was during the time of the Whitlam government, when the then minister for resources and national development, Mr Rex Connor, lead the push for the government nationalising many of Australia's resources. Indeed, it was a government that did enormous harm to resource development in this country.

  The course of action that was proposed by the Pipeline Authority (Charges) Bill in 1990 was nothing short of a disgrace because the bill attempted to get the government to break legal contractual arrangements. For that reason, the coalition opposed the bill very strenuously and, I am pleased to record, was so successful that the Senate accordingly rejected that bill.

  Instead of accepting the commonsense proposals of the coalition, industry and commentators—there was a way through had it been handled sensibly—the government withdrew the sale. It took its bat and ball and went home sulking. But the government had the audacity to accuse the coalition of thwarting and aborting its asset sales program. Of course, nothing could have been further from the truth. That was never the intention of the coalition because for many years the sale of the Moomba-Sydney gas pipeline had been part of our privatisation program. However, unlike the government, we were not prepared to adopt a process of negotiation for sale which would involve the breaking of legal contractual arrangements.

  In the 1992 budget the pipeline sale was resurrected, albeit after the government had copped an absolute caning by the courts for previously attempting to breach its contractual arrangements. At that time those court decisions fully supported, substantiated and vindicated the approach that the coalition had taken. Fortunately, this time around the government decided to adopt the more sensible approach of consulting AGL—which held special rights of first refusal—as the coalition had advocated from the beginning.

  This sale, like most of the other asset sales upon which the government has embarked, has had a very chequered, tawdry history. It has been a very prolonged and messy affair and one from which the government can draw no credit at all because of the way it has been handled.

  In June 1993 the government announced the establishment of a regulatory regime for national gas markets under which the sale could proceed and introduced the Interstate Gas Pipelines Bill. That bill was eventually deferred in the latter part of 1993 after much concern was expressed about it, firstly, because of lack of consultation with the states, which were concerned about the impact of the bill on competition, and secondly, because it seemed to be hastily and sloppily drafted.

  In June 1993 a conditional sale was negotiated with AGL, with AGL to purchase 51 per cent of the pipeline. In December 1993 a tender process was commenced for the sale of the remaining 49 per cent. That tender process was completed just last week with Novacorp International of Canada obtaining 25 per cent and Petronas of Malaysia obtaining the balance of 24 per cent.

  The Minister for Finance (Mr Beazley) has said that the gross proceeds will be between $520 million and $540 million, leaving net sale proceeds of around $470 million after various compensation payments are made. However, it is worth noting that, as part of the negotiations, the Commonwealth will have to assume some $190 million worth of debt. That means that the net return to the Commonwealth will be of the order of $280 million to $300 million if calculated on that basis.

  But even if we were looking at the $470 million for the net sale program—forgetting all about the debt that is being assumed—it is still a very distant cry from the $750 million or thereabouts that the then finance minister, Mr Willis, claimed in 1991 would be the proceeds of the sale, and for the loss of which he quite wrongly berated the coalition for not allowing the sale to proceed. The competitive national regulatory regime for the gas industry is still to be finalised by the Commonwealth and the state governments through COAG. However, this is an issue separate from the sale and we will be scrutinising that at the appropriate time.

  The regime arising from the COAG process will implement what was intended to be covered by the Interstate Gas Pipelines Bill and more. I assume that complementary state legislation will be required to complete the necessary arrangements in that respect.

  This bill before the Senate only concludes a limited regulatory regime to deal with the privately owned and operated pipeline. It is designed to ensure fair access, and it is judged by all parties as likely to do that. The Trade Practices Commission is still required to grant approval for the corporate structure of the purchasing vehicle before final approval is given; but that again appears to be more of a technicality and does not go to the heart of this particular bill.

  The coalition supports the sale of the pipeline. As I said earlier, we have long advocated this course of action. The pity is that this Labor government's sheer pig-headedness a few years ago resulted in the sale being surrounded with controversy and concern as it was delayed, deferred and finally revised only after the government's spending splurge needed some non-debt funding.

  The coalition will not be proposing specific amendments to the bill. The government has some technical amendments, and the coalition will not be opposing those either. If we take the whole history of this matter over the past five years, the sale process and the surrounding issues of competition should be remembered as a good example of how not to go about things in the future.

  The way in which this matter progressed early on was unfortunate. It did great damage to the government's credibility in the world of business and commerce because what the government proposed back in 1990-91 was a procedure which showed that the government was not prepared to keep its word on legally enforceable contracts and it tried to break them.

  I am pleased that that situation has now changed and that the sale has been negotiated to the satisfaction of all parties concerned. The sale will pave the way for a very worthwhile and beneficial development in this area. There are some points that I will take up in the committee stage and I will seek some undertakings of what I understand to be the government's intent in respect of some of the clauses of the bill.