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water politics: cut and run « Previous | |Next »
June 3, 2006

The story from the Lemma Government in NSW was that Snowy Hydro Ltd needed the money for expansion--this was the basis for the public float, and that it would use its share of the proceeds to fund health and education services. So why not continue with the float after the Howard Government flipped flopped and pulled the plug on its share, and then proceeded to blame NSW Government for the whole nasty mess?

Why did the NSW Government cut and run after being ambushed by Howard? Does not Snowy Hydro still need the capital? True, NSW does not want to put the money into the large investment needed to update the Snowy infrastructure, but couldn't the federal government hold a minority share in a privatised Snowy?

Alan Moir

By the way did you notice the way the Federal ALP Opposition has been more or less silent on the merits of the sale for fear of undermining their NSW colleagues' attempts to repair the state's rundown public infrastructure?Beazley supported the hydro sale. In the House of Representatives, fewer than five members opposed the legislation, and only two - independents Tony Windsor and Peter Andren - recorded their opposition to the sale. Most reckoned that the issue was about the sale of electricity --not water flows or the conditions of water flows. What was not had then was a national debate on who runs our water, who owns it, who has to pay for it and how secure it is.

The Australian Financial Review is not impressed by the economic nationalism of Bill Heffernan and others, which held that local and government shareholders were more likely to safeguard the interests of stakeholders in the Snowy scheme than would foreign shareholders.

The editorial says:

This [is] nonsense. The waters had been overallocated in the past by governments, resulting in serious land degradation along the Murray-Darling river system. Private, or foreign, shareholders could hardly do worse even if they controlled the waters, but they wouldn't have, because the NSW government retained ownership subject to a term-term licence to Snowy Hydro.

They have a point, don't they? The past record of water development has been pretty awful in terms of the overallocation of water, the salinisation of the landscape and the reduction of biodiversity.

So what is the argument for a private power company controlling the flow of water? The AFR adds:

There is nothing especially virtuous in public or Australian ownership; and social conditions can be just as effectively achieved by licence conditions imposed on private owners---even foreigners---than by the lumbering processes of government. This principle has underwritten public policy for more than a decade, though it is true it has been honoured in the breach when it comes to sensitive assets.

Woodside comes to mind, doesn't it? Why isn't Snowy Hydro seen as akin to Woodside -- in terms of national economic security. Isn't the Snowy scheme too valuable an asset to risk? Doesn't the national interest operate here? How can the licence conditions be guranted in the face fr profit earned from electricity?

The public's fear was that a privatised Snowy Hydro might compromise the irrigation and environmental side of the business in favour of the power side - concerns never effectively dealt with by John Howard or Senator Minchin. Doesn't the nature of the commercial operation of Snowy Hydro mean that power generation would take precedence over water flows in the Snowy, the Murray and the Murrumbidgee rivers.

Was the Howard Government cutting and running before people power? Or because it had failed to get the necessary legislative approval for selling its share of Snowy Hydro last year, and the new legisation to ensure legality may not have got through the Senate because Senators Barnaby Joyce and Steve Fielding would have voted against it?

What hasn't changed in all of this is the importance of water issues, given that Australia going to face a drier, hotter future, the National Water Initiative's recognition of the need for environmental flows, and the refusal of the Nationals to divert any water away from irrigators or productive use. The strategy has been to use public money to improve the infrastructure and for the Commonwealth to purchase the water saved from efficiency gains.

The problem here is that won't be enough for the environmental flows that are need to ensure healthy working Murray river because the overallocation of the water has been so excessive. Therein lies the key problem. However, the AFR is not much concerned about that issue.

| Posted by Gary Sauer-Thompson at 4:14 PM | | Comments (0)