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Wednesday, 11 September 1985
Page: 488


Senator SHEIL(6.26) —Before the suspension of the sitting for lunch I was recalling some of the past glories of the Snowy Mountains Authority. I had no quarrel with their talent and expertise or with the results of its various construction activities. I pointed out that there had been problems following the construction of all the dams, flumes, tunnels, power stations and irrigation works in that, first of all, the snow roof of Australia had been found to suffer from droughts too, which meant that there was a lack of water for the power stations. Not only was there a problem in supplying the peak power to Sydney and Melbourne in winter, when peak power was needed, but also when the water was let go to create that peak power it meant that there was not enough water for the summer. So another set of dams had to be put in to hold the water for the summer. This was at an additional cost, funded on the defence priority in a cost plus 10 per cent deal.

I said that the scheme had been of advantage to the south-east corner of Australia but had not been of any particular advantage to the rest of Australia. In addition, salinity problems had been created with the irrigation areas along the Murrumbidgee River and, furthermore, those problems had been passed into South Australia. I was trying to recall the name of the dam that had been constructed to flush out the Murray River in order to alleviate that problem. I think I mentioned the Chowilla Dam, but that one has not been built. I think that it was promulgated and there was a lot of talk about it, but another dam had to be constructed further up stream simply for the purpose of cleaning the salinity out of the Murray. These problems, of course, had little to do with the quality of the engineering work that had gone into the construction of the various Snowy Mountains facilities.

I was moving on to some of the business problems involved with the Government putting more money into this new Snowy Mountains Engineering Corporation. After wreaking expensive havoc over the last few years, in which it has lost about $10 million, the Government now intends to expand and extend the activities of the Corporation by removing its statutory restrictions. I pointed out that I considered that the Corporation would compete with private enterprise on an unfair basis and that it had been given carte blanche for its overseas operations. As an example of this unfairness I pointed to the fact that the Minister for Housing and Construction provided funds for the Corporation, which did not happen in private enterprise, that he had the power to direct all its powers and functions, and that he could waive interest on the capital it generated. Also, he could control the repayment of capital and at the same time direct the application of its profits. On top of all that, the Minister could guarantee borrowings of the Corporation, provided that those borrowings were made outside the Commonwealth. In addition, I pointed out that the Corporation was not subject to any State tax laws and that, even though it was a public authority for the purposes of the Audit Act, it was not a public authority for the purposes of the Income Tax Assessment Act.

There is another load to place on top of that. Contracts entered into by Corporation would not be invalidated just because the Corporation had not complied with its Act. One might as well tear up the Act if this kind of behaviour is to be entertained. This is the reason why the Opposition is suggesting that the Corporation should be privatised and the present 300 people who are engaged in it should be given first option of purchasing the shares. What the legislation actually does is confer financial benefits on a very small group and protect a job protection cartel. It will provide conditions that are not enjoyed by the Corporation's competitors.

I mentioned before that the Corporation is losing about $5m a year. While its sales are down 23 per cent on last year's figure, its overheads are up 20 per cent, despite the claim by the Minister that they are not. The Corporation cannot pay its bills at the moment and, of course, this falls straight back on to the taxpayer. Last year that sum amounted to $4m. Over the last three years the Corporation's accounts have been qualified by its auditors and its asset reserves have been written back against its operation losses. Any liabilities that it has as bank guarantees have not been brought to account. I think there is a question as to the commercial and financial management of the Corporation. Even its superannuation scheme liabilities have not been brought to account. Indeed, this is one of the biggest liabilities that the Corporation has at the moment. On reading the history of the Corporation, it seems to me that the only money it makes is from the sale of its houses. In addition, it is the only tenderer for many jobs, it quotes on a non-competitive basis and it carries out its work on a non-competitive basis; yet it still loses money.

I would like to bring to the notice of the Senate one more point that has not been mentioned so far. I refer to two items on page 38 of the Scrutiny of Bills Alert Digest No. 5 of 1985 which I think should be recorded. The digest states:

The Committee is concerned that the proposed sections place no limitation on, and give no indication of, the attributes of persons to whom the powers of the Board or the Minister may be delegated. It therefore draws these provisions to the attention of Senators....

Secondly, the Scrutiny of Bills Alert Digest states:

Proposed section 50 would provide that the Corporation is subject to taxation under the laws of the Commonwealth `and to such other taxation as the Minister specifies'. It appears that the section is a re-wording of clause 40 of the Snowy Mountains Engineering Corporation Bill 1985 to which the Committee drew attention in its Alert Digest No. 3 of 1985 (17 April 1985). That clause provided that the Corporation was not to be subject to State or Territory taxes except as provided by regulations. Proposed section 50 goes even further by removing the decision to subject the Corporation to State or Territory taxes from parliamentary scrutiny.

The Scrutiny of Bills Committee draws that to our attention. I draw that to the attention of the Senate because I do not think it has been mentioned so far. I conclude by saying that the Opposition is opposed to the Bill.