NATIONAL AFFAIRS: by Peter WestmoreNews Weekly
Snowy Hydro's privatisation is theft
, May 27, 2006
The privatisation of Australia's iconic infrastructure project is set to go ahead despite widespread public opposition, writes Peter Westmore.The New South Wales, Federal and Victorian Governments have agreed to privatise one of Australia's greatest infrastructure projects, the Snowy Mountains hydro-electric scheme, and have presented the sale to the Australian people as a fait accompli.
Despite calls in New South Wales for an inquiry into the sale, the NSW Premier, Morris Iemma, ruled out any delay in the privatisation, which is due to be completed this year.
Mr Iemma is understood to want to use the $2 billion - which his state will gain through the privatisation - as a "war chest" for the next NSW election, due late next year.
The Snowy Mountains hydro-electric scheme took more than 25 years to build, and includes seven power stations, 145 kilometres of tunnels and pipelines, and 16 dams with a total storage capacity about 13 times the volume of Sydney Harbour. The Snowy scheme was built with public moneys, and amply repaid governments in the form of revenue from both electricity generated and increased agricultural production along the Murray River, into which the water finally flows.New owners
After it is privatised, the people will have to pay again for what they already are supposed to own, in profits paid to the new owners.
The privatisation of Snowy Hydro Ltd has been opposed by farmers, some politicians, and former Snowy Scheme engineers like Max Talbot and Snowy Scheme Commissioner, Vin Good. They say that guarantees of water flows to the irrigators along the Murray and Murrumbidgee Rivers are "not worth a cracker".
Snowy Hydro Ltd, which owns the 3,756-megawatt hydropower system in Australia's Southern Alps, supplies about 74 percent of the renewable energy in eastern mainland Australia. It can start generating power within 90 seconds, allowing it to benefit from surges in wholesale prices at peak-demand periods. Peak power demand in eastern Australia, the nation's most populous area, is forecast to rise 35 per cent by 2015.
Snowy Hydro Ltd is jointly owned by the NSW, Victorian and Federal Governments, principally by the NSW Government. NSW owns 58 per cent of Snowy Hydro, Victoria 29 per cent and the Federal Government 13 per cent. Since it was corporatised several years ago, Snowy Hydro has become a player in the electricity market, purchasing a gas-fired generator in the Latrobe Valley, and constructing another gas-fired generator just outside Melbourne. It also owns Red Energy, an electricity retailer.
The Snowy Scheme supplies about 2,100 gigalitres of water - which would otherwise flow into the sea - into the Murray Darling Basin, supplying inland irrigators along the Murray and Murrumbidgee Rivers.
As a private company, its focus will change from providing two vital services, electricity and water, to maximising profit. The principal losers are likely to be farmers.
Federal Liberal Senator Bill Heffernan attacked the sale. He used a public meeting at NSW Parliament House to criticise the planned privatisation. He said releasing water for local communities and environmental flows would not be the first priority of a privatised hydroelectric scheme.
Water policy in Australia was a shambles and needed to be nationally coordinated, he said. "In my view, Australia ought to hold a referendum on water and hand it to one authority."
Local communities down river from the Snowy Scheme are concerned about the impact of the sale because Snowy Hydro Ltd has a licence to store and divert water from the Snowy catchment which will not expire until 2079.
Ian Morse, a civil engineer, said the privatisation of Snowy Hydro will "have potentially disastrous consequences for the future management" of the Snowy scheme's water.
He called for a suspension of the sale process, an open and independent examination of the operation of Snowy Hydro, and "a proper evaluation of the impact of passing control of this quantity of water, our most valuable and appreciating resource" to private hands for the next 72 years.
The privatisation of the Snowy scheme is the culmination of a process beginning with the privatisation of power generation in Victoria by the Kennett Government in the early 1990s, which put a massive $23 billion into the state's coffers to pay off the state's debts.
This was followed by the introduction of National Competition Policy by the Keating Labor Government in 1995, which foreshadowed full competition in electricity pricing.
The policy was confirmed by the Howard Government, when it came to office in 1996. Under NCP, Commonwealth and State governments undertook to reform the electricity, gas, water and road transport industries.
As far as electricity was concerned, they agreed to introduce a National Electricity Market (NEM), under which consumers would be able to obtain electricity from any one of a number of suppliers.
The Snowy Mountains Hydro-Electric Authority, previously a government body, was then corporatised to become Snowy Hydro Ltd, to participate in the National Electricity Market.
Its full privatisation is the culmination of this process.