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Tuesday, 7 June 1994
Page: 1410

Senator COULTER (5.35 p.m.) —I rise to speak on the Moomba-Sydney Pipeline System Sale Bill 1994. There are two points that need to be made right up front in relation to the sale of this asset. This is just another of the moves by the government to sell anything at all to improve the current account situation. In this case the government is selling what is essentially an asset.

  The two points are as follows: firstly, the government is selling this asset well below its real price, and I will produce evidence to that effect; secondly, the government is selling an asset which is extremely profitable and therefore should be kept in the public domain. Since 1988 the ratio of net earning before tax compared with assets has risen from 14 per cent to 24 per cent, which is out-performing the majority of the 500 top companies in Australia. That is the essence of what I want to say.

  The government should not be selling assets that are owned by all the people of Australia at below their proper price—particularly assets which are so profitable and are therefore helping the government in the longer term with its financing of other programs. We have just completed a debate in relation to CSIRO funding. Here we have the sale of an asset which is highly profitable, and which is generating income for government. This asset is being sold off at less than its real value.

  This bill has been rushed through parliament in an attempt to have the sale completed by 30 June to make the budget deficit for 1993-94 look better. It is one of these hand-to-mouth activities where the government says, `Simply scrape through this year, make the accounts look as good as you can, and to hell with what happens afterwards; leave the problems behind for other governments or later generations.'

  It is appalling that asset sales are included in the budget deficit figures which mix up both current and capital expenditure. That has been done deliberately by this government to obfuscate the situation before the Australian public. In 1993-94 the government will fund $2 billion worth of recurrent expenditure from asset sales; in 1994-95 the government hopes to fund $2.4 billion from asset sales. It is capital being used to prop up expenditure. It simply would not be accepted in any ordinary business, and it should not be tolerated in government.

  When everything that the people of Australia own has been sold, how will the federal government fund its recurrent expenditure? It is difficult to identify why the Moomba system has been chosen for privatisation, other than simply because it can be sold now and it happens to be profitable. Firstly, it is a natural monopoly. Secondly, under the contractual arrangements agreed to by Rex Connor in 1974 AGL had a right to first bid. AGL is the monopoly distributor of gas in Sydney. As the Industry Commission pointed out in its report on gas, AGL's purchase of the system raises serious concerns about vertical integration in the gas industry. Thirdly, because of the favourable borrowing arrangements in the Commonwealth, no private sector bidder would be likely to be prepared to pay a price which represented the real value to the Commonwealth of retaining this asset.

  Professor Bob Walker from the University of New South Wales estimated in 1992 that the then value of the pipeline to the Commonwealth was between $649 million and $981, depending on the estimated sales revenue growth. By contrast, the government expects to receive just $510 million to $550 million gross and about $300 million net from the sale. That is grossly below the real value of this asset.

  Fourthly, as the debts of the Pipeline Authority have fallen, the profitability of the pipeline has increased markedly, rising from $19 million in 1992-93 to $25.3 million in 1993-94. Of course, the all important net earning before tax profitability of the pipeline compared with assets has improved from 14 per cent in 1988 to 24 per cent last year and, as I said earlier, is outperforming the majority of the top 500 companies listed on the Australian Stock Exchange. The question must be asked: why sell it? The answer must be because the government wants money and is too scared to cut expenditure or to raise taxes. That bears fairly and squarely on the inadequacies of this government's budget.

  The privatisation has been extremely complex. The web of legal contracts left over from Rex Connor's time in setting up the Pipeline Authority in 1974 has created a wide range of legal rights. In its desperation to have the sale finished this year, the government has paid big money to buy out these rights, paying $30 million to AGL and $20 million to the Cooper Basin gas producers. We have seen no public evidence whatsoever as to whether these payments are reasonable or were based on independent and sound legal and financial advice. Publicly, the only defence we have seen of the $20 million agreed to be paid to the producers last month was eight lines in a ministerial press release. We will not even know until the end of next week whether the boards of directors of the affected companies will accept the settlement.

  The same press release also contained the only justification for the government deciding to sell 49 per cent of this important strategic pipeline to foreign interests. This time we have four lines informing us that the toothless Foreign Investment Review Board had approved the sale. As the Senate now knows, the Foreign Investment Review Board has only an advisory capacity and is without any real power whatsoever.

  Again, there is no public evidence as to why the approval was granted, why this foreign consortium was chosen, whether Australian bidders were considered and why the company was not floated. None of that evidence has been provided. Instead, we will add to our net foreign equity liabilities, which have grown from nine per cent to 16 per cent of GDP in just four years, and add to the current account headache our children will inherit when the dividends start flowing out of the country to the growing number of foreign owners of this country—foreign owners of our land and our assets.

  This bill does a number of things. It allows the establishment of a company called Newco, which will take over the assets of the Pipeline Authority. It then allows the government to sell Newco—51 per cent to AGL and 49 per cent to a minority shareholder, the foreign owned syndicate. The bill also establishes an elaborate post-sale regulation system. These provisions were hastily added to the bill at the second reading stage in the House of Representatives, with more amendments moved here today. It is clearly a very scrappily put together piece of legislation.

  As I understand it, this regulatory system has been developed with the assistance of the Trade Practices Commission and seeks to ensure that third parties have access to the pipeline. The late amendments act to improve these access provisions. Access disputes will be arbitrated by the Trade Practices Tribunal under clause 80 of the bill. I will be moving an amendment to clause 80 to widen the arbitral powers of the Trade Practices Commission and I understand that the government will accept this first amendment.

  Under its basic legislation, the Trade Practices Commission and the tribunal have the power to take into account the public benefit. This is a wide test which includes the benefit of competition and consumer and environment interests. But the bill before us, under the influence of the ideologically driven Hilmer competition policy report, I suspect, sees a narrow public benefit only—the benefit of competitive markets. This is unacceptable and will restrict the tribunal in its decision making as well as ignoring two decades of the development of trade practices law. For that reason, I will be seeking to amend this clause. I will also seek to insert a new clause after clause 137.

  It is typical of this Labor government that it is prepared to pay out $50 million of taxpayers' money to settle out of the public eye—I have drawn attention to the lack of information we have on these settlements—the contractual obligations of big companies, but it has not agreed to a settlement with the employees of the authority, the little people, the little workers. I notice the Minister for Industry, Science and Technology, Senator Cook, is in the chamber. Senator Cook is formerly of the ACTU, and he should be absolutely ashamed of the deal that the current workers in the Pipeline Authority are being given by this legislation.

  These employees deserve to be commended. The authority has dramatically increased its profits and is outperforming the majority of the large public companies—the Labor mates in the big end of town. The employees can take credit for much of this, but Labor proposes more than just privatising this company.

  The new owner has said that as many as one-third of the existing employees will not be needed. If people are not prepared to move from the Canberra headquarters to the AGL Sydney office, this number could rise. Also, the government will allow AGL to make employment offers to the employees, which will include AGL's considerably less generous superannuation and redundancy schemes. Those who refuse AGL offers will be redundant and, if not deployed, retrenched. Shame, shame, shame on a Labor government that says that it looks after the interests of workers.

  The employees will not receive just compensation for the quashing of their contractual obligations. The government has not said it will pay them the emerging community standard for compensation—the sort of compensation that it paid to the workers of the Commonwealth Bank, Qantas and Commonwealth management funds when those operations were partially privatised. No, they will get only the inadequate public service standard. The government can find $50 million to compensate the big companies for loss of their contractual rights, but it cannot find $2 million to compensate these hardworking and highly productive employees for the loss of their contractual rights.

  This government says it wants people to work harder and to be more productive. When they do work harder and are more productive, it simply hits them in the face, makes them redundant and fails to adequately compensate them for their loss of jobs. These employees have been forced to consider taking industrial action for the first time in the authority's 20-year history to defend their rights. Again, it is a sad reflection on this government that it is introducing legislation and a process which forces workers, who for 20 years have been without industrial action, to take such desperate action to defend their rights. I will be seeking to move an amendment to clause 137 to require the government or AGL to reach a just agreement on superannuation entitlements and redundancy payments after the sale.

  I would have liked to see this bill go to the Senate industry committee. There is still so much in this bill which is unclear. I would like to see the government defend its regulatory regime, its $50 million payments and its decision to sell 49 per cent to Novacorp of Canada and Petronas of Malaysia. I would like to see the arrangements on compensation to staff finalised and reported to the Senate before this bill is passed. In particular, I would like to see the government defend its decision to sell the pipeline and see what defence it has to Professor Walker's assertion that the government is selling this asset for well below its present value. But the new-look, moderate coalition has a new privatisation spokesperson—the in-again, out-again, sell-it-all Mr Moore.

  Once the big end of town has been placated with its compensation payouts, the interest of the coalition in making sure this sale was accountable to the public and a fair deal disappeared, and disappeared completely. We have heard from the opposition that it is quite prepared to acquiesce in the passage of this legislation. I find this curious because if Labor sells this asset for below its market value it will be one less asset which the coalition can sell to fund its promises if it wins an election. If it wins an election, it will be left with the massive debts that this government will inevitably leave behind.

  This bill should be closely scrutinised. It disappoints me that, because of the coalition's change of heart and the government's desperate need to cook the books in 1993-94, it will not be scrutinised. It disappoints me greatly that the opposition and government will combine to pass this legislation.

  The Democrats will be voting against this legislation. We believe it is wrong. We believe the government is selling an asset at well below its true value. It is selling an asset which is highly profitable and, therefore, of long-term benefit to all the people of Australia, not just to AGL, a private company, and the 49 per cent foreign ownership company into whose hands it will pass. We will be seeking to divide on this matter because we believe it is very important. These very important assets are owned by all the people of Australia.