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Monday, 5 June 1989
Page: 3353


Senator PARER(8.28) —Tonight we are debating eight Bills cognately. I intend to address my remarks mainly to the Snowy Mountains Engineering Corporation (Conversion into Public Company) Bill 1989 and to briefly address the Customs Tariff (Coal Export Duty) Amendment Bill 1989. The transition of the Snowy Mountains Engineering Corporation (SMEC) from a statutory corporation into a company incorporated under the Companies Act 1981 by virtue of proposed section 21 is a step in the right direction. It is made up of four main factors: firstly, the creation of share capital; secondly, the repeal of sections 41 and 42 of the Snowy Mountains Engineering Corporation Act 1970; thirdly, the transition of the Snowy Mountains Engineering Corporation into a company; and, finally, the repeal of section 6 of the SMEC Act that established SMEC as a statutory corporation to take effect immediately it is registered as a company.

I think it is worth recounting a little bit of history about the Snowy Mountains Engineering Corporation. It was established in 1970 but had been going since 1950. Honourable senators will recall that in 1949, within four or five years of the end of the war, a decision was made to proceed with what turned out to be the greatest construction that this country had ever seen. Since that time there have been constructions of equal or greater magnitude, but it was a massive project. As we did not have the necessary expertise in those days, it was necessary to form a coordinating group to oversee the construction of what turned out to be the Snowy Mountains scheme with its dams, tunnels and hydro-electric generation equipment. It was built primarily for irrigation and the secondary effect was that of producing hydro-electric power to cope with the peak requirements in both New South Wales and Victoria.

That is the background of the scheme. It did an incredibly good job. It became a training ground for engineers, for operators, and for people using large equipment such as large bulldozers that we had not seen in this country before and massive earthmoving equipment. From that training ground people moved into engineering consulting businesses. Many senior partners in engineering consultancy groups today have their origins in the Snowy Mountains Authority. It attracted people from all around the world. It was the beginning of our immigration program. Countless numbers of ethnic groups participated in the great Snowy Mountains scheme.

In 1970 the Government of the day decided to form the Snowy Mountains Engineering Corporation. The idea was to consolidate civil, electrical, mechanical, water resource development, power generation, transmission, irrigation, land development and road engineering expertise. All those great areas of expertise were coordinated under the Snowy Mountains Engineering Corporation. Now, nineteen years later-something like 40 years from the day the decision was made to go ahead with the scheme-the Snowy Mountains Engineering Corporation is being converted into a company with public company status but with all the shares being held by the Government.

My concern lies in not knowing how effective this move will be. This is a great organisation but there are equally important consulting engineers in other parts of Australia-I could name them, but by doing so I would be giving a commercial and I might offend those I left out-who have a worldwide reputation. There is no doubt that if we let the Snowy Mountains Engineering Corporation off the leash it could form partnerships with other groups without having to get the Minister's permission. I draw the attention of honourable senators to the latest Snowy Mountains Engineering Corporation report 1987-88, where reference is made to directions to the Corporation issued by the Minister between October 1987 and December 1987, which was not a long period. One of the directions was not to join in the formation of partnerships and joint venture companies without the prior written approval of the Minister. It is unclear from this legislation and from the second reading speech whether the Minister can continue to give those directions, although I notice from the second reading speech that the Minister says that he will be free to continue to issue directions. We cannot have an organisation competing with larger projects, not just against our own consulting engineers but against consulting engineers from around the world, when it has to meet certain requirements. It does not make any sense.

I note also that it is stated in the second reading speech that the Corporation is not to enter into contracts which conflict with Government policies. How can we expect an organisation to meet this requirement? I say this for the benefit of Senator Coulter, who earlier today expressed concern about its conversion into a public company and its being a possible step down the road to partial or complete privatisation. Senator Coulter could not understand how the free market could, in fact, offer an organisation like this better opportunities. All I can say is that he must have no understanding at all as to how the market operates in this area. It is a competitive area. He argues that this organisation has a social function. Everyone in this field, in one way or another, has some sort of social function.

The difficulty I have, and I know members of the Government certainly have, is to ascertain just what the Government's real position is on this. Is it step one down the track to privatisation? If so, why does the Government not come out and say so? It would not be hard to sell, least of all to the people who work for the Snowy Mountains Engineering Corporation itself. They would love it. Let me give the House an idea of the conflicting remarks that have been made. In July 1985 the Prime Minister of this country, Mr Hawke, at the Nunawading by-election, had this to say about privatisation:

Privatisation is a one-off fire sale, a sale of the century, of your assets-assets of the people of Australia. They would transfer them into the hands of a privileged few, to the cost of every one of us.

He also said in the Parliament on 21 November 1985:

. . . anyone who thinks about the issue of privatisation knows . . . it would mean higher prices, higher costs, higher taxes and higher fares . . . It is quite clear that in South Australia-

there must have been an election on-

as in Australia as a whole, privatisation would be an expensive and disastrous experiment.

The Treasurer, Mr Keating, is reported in Hansard on 23 May 1985 as follows:

No matter where one looks, whether at TAA or the other authorities, there is no case for the Opposition's argument in economics, except simply to indulge ideologically in a Thatcherite, vandalistic splurge to try and destroy these authorities.

However, the enormity of Australia's structural rigidities in the face of balance of payments crises finally hit home and, with it, the realisation that micro-economic reform could not be postponed any longer. All of a sudden, the Prime Minister and the Treasurer changed their tune and did a 180-degree turn. I understand from Senator Evans that he has always held this view, and I congratulate him on it. I hope he is in the ascendancy right now. According to the Prime Minister, privatisation is now a matter of a reasonable and rational assessment of public sector priorities. He was reported in the Economist of 26 August 1987 as follows:

The question should be not `why should we sell a given enterprise?' but: `why should we continue to tie up our resources in it?'

That is very sensible. He went on:

Privatisation, they argued, would save the Commonwealth hundreds of millions in capital injections which would then be available for social programs and even tax cuts.

Presumably, the social programs would be to try to hose down the antagonism and opposition of the Left of the Australian Labor Party (ALP). At a press conference on 27 April 1989, the Treasurer said:

Some assets may be used more efficiently outside the public sector. Sales of some assets would certainly relieve the Budget of ongoing subventions and, of course, all asset (sales) produce a capital appropriation to the Budget which either retires debt or slows down the build up of debt and hence, relieves the Budget of its very high public debt interest and commitment.

No wonder Australians are confused about the privatisation issue. Should they believe what the Prime Minister and the Treasurer told them about the perils of privatisation in 1985, or should they accept the new version about its benefits which the Prime Minister and the Treasurer now preach in 1988-89?

The Liberal-National Party Opposition, on the other hand, has consistently promoted the idea of privatising government enterprises since 1984. A Federal coalition government would raise between $5 billion and $10 billion in revenue from the sale of Commonwealth assets. The funds from those assets would be used to reduce our burgeoning national debt which, as we all know, is reaching crisis proportions. The Snowy Mountains Engineering Corporation was one of the instrumentalities that we indicated we intended to privatise on taking over government. The others have been spelt out by my colleague Senator Alston. They include: Australian Airlines-I will come to that again in a minute; Qantas Airways Ltd; the Housing Loans Insurance Corporation; Medibank Private; 49 per cent of the Overseas Telecommunications Commission; and the Commonwealth Bank. Employees will be encouraged to have a stake in their industry through share purchasing schemes.

In recent days this issue has been raised by Mr Willis. Yesterday he put privatisation firmly back on the ALP's agenda by expressing a personal preference for full sales of the two Government owned airlines, Qantas and Australian Airlines. He made these remarks on the Ten Network's Face to Face program. He said that even if the Government sold an entire enterprise, it would retain some control through a kind of golden share which would enable it to limit the degree of foreign ownership or the size of any one holding of the enterprise. Of course, this is part of the Opposition's policy platform on privatisation. It is a system that was used in sensitive, strategic areas in Great Britain when that country went into its privatisation mode. The Prime Minister yesterday-the very day on which Mr Willis made those remarks-supported him by saying, `I thought Mr Willis put the issues very fairly and directly'. However, in today's newspapers one of the leaders of the Left, Senator Childs, said that privatisation was akin to selling the family farm.

There is great dissension within the Government on this perfectly sane way of approaching the problems in our country today. I also note that Mr Peter Milton of the Victorian Labor Left stated that the issue was fairly divisive. He said that it is a great mistake to float this sort of idea in this way. It is patently obvious that an issue such as this is very divisive within the ranks of the Labor Party. As I mentioned earlier, Senator Evans stated quite categorically that he has had a view on this which has never changed. I congratulate him and hope he is successful. There is no doubt that if he is he will have the support of the coalition for what the Government hopefully intends to do. But I am unsure, as is the rest of Australia, of the Government's present position and the Government should clarify it.

The status of the Snowy Mountains Engineering Corporation is now being transformed into that of a public company but nothing else has been said about it-except that in the Minister's second reading speech he says that all the shares will initially be held by the Commonwealth. That is a good sign because it indicates that the Government is thinking that it will move towards initial partial privatisation by management buy-out of certain shares and, eventually, the total sell-out of those shares either by sale to the management, through a buy-out operation, or by way of a merger with some of the leading consulting companies in Australia. If this is the plan, the Government should come clean and remove the confusion within its ranks and within the Australian community. If the Government comes clean, it can have no doubt that it will get the support of the Opposition. In the same way, Senator Chaney promised in another area of micro-economic reform that if the Government moved to free up the waterfront and pursue the recommendations of the Inter-State Commission, it would receive our total support. In this instance, the Government should put its toe in the water.

Compared with Australian Airlines or Qantas, the Snowy Mountains Engineering Corporation is a small fish in terms of privatisation. So I recommend that the Government put its foot into the water. I know it is a small step for privatisation, but it seems to me it is a giant step for a Labor government. The effect of such a step would be to let off the leash those who work within the Snowy Mountains Engineering Corporation-those top operators, those people whom we all admire-so that they can go out and enhance an organisation that has done an excellent job to date.

I would like to touch very briefly on the amendment to the Customs Tariff (Coal Export Duty) Amendment Bill 1989.


The ACTING DEPUTY PRESIDENT (Senator Peter Baume) —Order! That will be dealt with in another debate. It is not part of this debate. I think you will have a chance to speak on it later.


Senator PARER —Is it not a cognate Bill?


The ACTING DEPUTY PRESIDENT —Not with these Bills.


Senator PARER —Finally, I believe that this legislation is a move in the right direction. I hope sincerely that it is the first step in what will end up as privatisation of an area which can only be of benefit to the people who work in the organisation and to the country as a whole.