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Friday, 29 November 1985
Page: 2561


Senator DURACK(9.13) —The Opposition will not support the Pipeline Authority Amendment Bill 1985. We have very serious reservations about the nature of the proposals in the Bill and the implications for Commonwealth and Australian taxpayers. In particular, we are concerned about the proposal to remove pipeline construction proposals from prior legislative approval, the willingness of the Government to provide significant concessions to enable politically inspired objectives to be met, continuing Commonwealth commitments to uncertain and prolonged debt recovery and the refusal of the Government to recognise the potential benefits from privatisation of the Pipeline Authority.

While ministerial controls and some external scrutiny of financial commitments will continue under the proposals in the Bill, the proposal to remove proposals for pipeline construction from parliamentary authorisation will remove potentially significant financial outlays from prior parliamentary scrutiny and possible veto. Given the huge outlays involved in pipeline construction, it is essential that any commitments should receive detailed and objective analysis prior to authorisation. Despite the best intentions of Ministers, shortsighted political objectives often override sound financial considerations. It is the role of this Parliament to review such proposals and protect Australians from pet projects of Ministers of whatever government may be in power. The excesses of the Whitlam years and the unrealistic dreams of Rex Connor are revived very powerfully when we talk about the Pipeline Authority and pipeline proposals. All that memory provides a powerful example of and precedent for the need for countervailing controls on unlimited government powers.

Following this experience the Fraser Government, when elected in 1975, amended in 1976 the Pipeline Authority Act to require legislative approval for pipeline construction. This statutory requirement to report to Parliament should remain. The Minister for Resources and Energy, Senator Gareth Evans, should not so readily dismiss images of Mr Rex Connor-this is his own image, conjured up recently-riding over the horizon on a large horse with a resource development blueprint in hand. It is obviously a memory which somewhat haunts Senator Evans as it haunts all of us who had the experience of the years involved. In fact, Senator Evans's own revelation of an energy policy is an ominous sign of future Federal Government attempts at ownership and control of resource industries in Australia. In the tradition of Rex Connor, Senator Evans clearly envisages Federal control over all resource development, including gas pipelines and electricity generation, which principally have been under State control. These proposals run counter to recent State initiatives to privatise these functions.

Despite the rhetoric of consultation, this Government rarely accepts industries' views when decisions are made. All of its decisions relating to the resources industry have either maintained the status quo or proposed further regulation and new and increased taxes. The recent cash bonus bidding fiasco is a prime example of this. Throughout many months of discussion with industry and with others earlier this year, Senator Evans refused to accept all logical and rational arguments opposing cash bonus bidding. So logical and rational were those arguments, I might say, that they even appealed to the Australian Democrats at that stage. Senator Evans did a back room deal with some Democrats while at the same time leading industry representatives to believe that they were only negotiating with him about new proposals for signature bonuses and retention lease premiums.

This Parliament has very good reason to be sceptical about the intentions of the Minister. Although Senator Evans may have been able to persuade enough Democrats to change their mind on the subject of cash bonus bidding-they not only changed their mind but also some of them changed their vote of a few months before-at least the Parliament achieved a two-year sunset clause as a result of that rather disgraceful episode in the Senate this year. This sorry episode highlights the role of Parliament in limiting excesses of government power via the requirement of prior legislative approval of major policy proposals. The Government considers that pipeline construction proposals, as I have said, should continue to require prior legislative approval. The first thing that the Bill does is to remove that requirement.

The revision of the haulage agreement, as it is called, has provided Senator Evans with another opportunity to grandstand. He has claimed that the revised pricing formula will apparently enable the Commonwealth to recover all of its past and future costs by the year 2006 and thereafter provide a profit component. This unserviced debt is estimated to reach $2 billion by 2006. The Minister is grandstanding because he says he now has a formula that will save that sort of debt that would otherwise have accumulated by then. He also claims that future price increases will never exceed increases in the consumer price index, and may be considerably lower. Other apparent achievements claimed include a $20m expansion and refurbishment program of supply facilities for the Bathurst, Orange and Lithgow region by the Australian Gas Light Co., which is referred to as AGL, and the construction of a spur line to these areas by 1988, which is a familiar political milestone from this Government.

The Opposition is concerned to prevent the financial excesses of other Hawke Government so-called achievements such as the deal concerning the former Executive Director of the Australian Bicentennial Authority. We suspect that the costs of the Bill will probably outweigh the apparent benefits. Senator Evans in his second reading speech, public statements and even in answers to questions in Estimates committees has disclosed far too little information and data to permit a proper assessment of the true position relating to the pipeline deal with AGL. These future claims cannot really be assessed by this Parliament because it has not been given sufficient information. All his statements have been in very general terms, are certainly contentious and may well prove to be just as dreamlike as the ideas of his famous predecessor, Mr Rex Connor, some years ago.

Some of the major costs of the revised agreement, which one can identify, include the potential profits forgone by the Pipeline Authority; significant price concessions to AGL; AGL's control of existing supply facilities in certain regions; and the participation of AGL in the decision making process of the Pipeline Authority. The Opposition will not support the proposal in the Bill for AGL to be given a position on the board of the Pipeline Authority. I will deal with that in a moment.

Before completing my remarks on the financial situation with which we are faced as a nation, I say that the arrangements that have been made by the Pipeline Authority with AGL have been around for some time. The advice that we have received indicates that the Pipeline Authority probably would have been able to negotiate a commercial tariff in the future, but that may have been some time down the track, perhaps at the end of the century. That would have recovered previous losses and offered more than the revised agreement which will provide only cost recovery plus a small return while giving AGL security of supply at a low price for approximately 20 years in advance. AGL appears to have done very well out of the revised arrangements, which Senator Evans has lauded as a great achievement for the Government and, no doubt by deduction for himself. All we can hope is that the Government has not sacrificed long term revenue for the sake of short term political benefits and commercial convenience.

While the revised agreement apparently rectifies the growing debt problem of the Authority, the success of the agreement depends upon a number of critical assumptions about inflation, interest rates, costs and sales, which all may, and no doubt will, vary considerably from the data on which the arrangements have been entered into. Past experience highlights the uncertainty of such assumptions and the potential adverse impact of providing a commitment on the basis of such assumptions. The Opposition is concerned about the apparent conviction of Senator Evans that future price increases will never exceed increases in the consumer price index and may be considerably lower. For one thing, no doubt consumers will claim compensation if this commitment cannot be fulfilled and the end result may well be a further drain on government revenue.

The Opposition is very concerned about, and will oppose, the participation by an AGL representative which effectively creates a joint Commonwealth-State authority and may inhibit the future privatisation opportunites of this Authority. Senator Evans has not demonstrated the rationale and merit in having a buyer-in this case the major consumer, AGL-represented on the board of management of the seller, namely, the Pipeline Authority. While the AGL representative would be bound by the conflict of interest provisions which are set out in the Bill, AGL would gain access and control which may provide an advantage over potential competitors and may be an effective barrier to entry into the industry. As the bulk of the Pipeline Authority business relates directly or indirectly to the contracts with AGL, it will be difficult, if not impossible, for the AGL nominee not to be in breach of this conflict of interest provision if he is to participate effectively on the Pipeline Authority board. Clearly, we have a farcical situation which needs to be explained and resolved by the Minister. He has failed to do so. As I said, the Opposition will not accept that.

The Pipeline Authority will be considered as part of the privatisation policy of the coalition when we make our general review of the commercial activities and operations of the Government. The recent financial restructuring of the pipeline agreement has been hailed by Senator Evans as a great achievement. He also claimed that having achieved that, he had negated any Opposition arguments for the privatisation of the Authority. How on earth he arrived at that reasoning completely escapes me. Perhaps not surprisingly, Senator Evans clearly misunderstands the arguments of the Opposition on this issue. Even if the revised financial agreement enables the Government to recover huge accumulated losses of the Authority-at this stage some $59m, as Senator Evans mentions-and even if the agreement does save probably $2 billion in losses which would otherwise accumulate over the years, of course, that is a situation which should never have occurred in the first place. Even if that money will now be recouped, there are, of course, still other possible future benefits to be obtained from privatisation of the Authority.

We believe that the commercial activities and operations of government should be within the private sector where that is appropriate. We in government would certainly dispose of commercial enterprises or their assets, either wholly or partly owned by the Government, which should in our view be more properly in the hands of the private sector. We have already indicated such bodies as the Australian Industry Development Corporation, Medibank Private and the Housing Loans Insurance Corporation as public authorities which ought to be disposed of without delay. Further, we will undertake an examination of the role, structure and level of government ownership and control of enterprises generally. Of course, that will include the Pipeline Authority. This examination will include an assessment of the desirability and feasibility of disposal of the whole or part of the Government's interest in such assets or enterprises. Of course, we will also give consideration to whether the public benefits of disposal outweigh the public benefits of retaining such a utility and, of course, to the various conflicts of interests which may arise. But we are determined to expose government enterprises to greater competition from the private sector, particularly where monopolies or near monopolies currently exist.

All of these matters will be canvassed in greater detail with industry and others before any specific coalition proposals on privatisation are made. I emphasise that we are certainly pursuing that policy with great seriousness. Absolutely totally superficial arguments, which Senator Evans has made, that his wonderful new agreement negates our arguments, are absolutely beside the point and indicate a complete misunderstanding of the Opposition's policies. In fact, Australians clearly recognise the benefits of broad private ownership of commercial undertakings and activities. Recent opinion polls have shown that that is the case. There is very clear recognition and understanding of what the Opposition's privatisation policy is all about. Clearly, a reduction in government expenditure which would be achieved by such a policy will provide significant benefits in terms of reduced taxation. The Hawke Government, of course, is quite unable to achieve lower levels of taxation because it is quite unable to achieve the required expenditure restraints.

It is for these reasons that the coalition will not support this Bill. It seeks to achieve only two things. It does not seek approval of the haulage agreement. Unfortunately, that is not something upon which Parliament is called to vote today. Indeed, as a parliament we cannot even get adequate information to make a full judgment and assessment of this so-called achievement of Senator Evans. He comes here with two proposals which arise out of that agreement, neither of which commend themselves to us. We will vote against them.