Labor Governments in NSW and Queensland are continuing to blow billions of dollars playing the politics of power.
Labor governments in NSW and Queensland are continuing to blow billions of dollas playing the politics of power.
By Stephen Mayne
Remarkable as this may seem, the government-owned Queensland electricity last year turned in a result $800 million worse than expected and it has barely caused a ripple in the Sunshine state.
Cripes, imagine how bad they are going to go when the interconnect with NSW is completed later this year.
Queensland has blown all this value without even being part of hte national grid. The power companies were projected to tip in $500 million to the state’s coffers last year but instead managed to suck $300 million out.
Where was the media? How did this happen? Firstly, with power prices plunging along the eastern seaborad, the government has been caught with its pants down with several long term power purchase agreements with privately owned stations.
COMALCO CLEANS UP THE QUEENSLAND TAXPAYER
There is no bigger disaster than the PPA with Comalco’s giant Gladstone power station which this soon-to-be 100 per cent foreign company bought from the Goss government for a song in 1993-94. Not only did Comalco get the security of supply they demanded for their nearby Boyne Island aluminuim smelter, but they struck a long term contract to sell all the surplus capacity back to the state at inflated prices.
This is the same company that has been offered $100 million in Federal subsidies to locate a new $1 billion alumina plant in Queensland but is still toying with building it in Malaysia.
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TAXPAYERS UNDERWRITE OTHER STATIONS TOO
The Queensland taxpayer has also effectively underwritten two privately run stations near Townsville with long term, out-of-the-money PPAs. Transfield and American company AES are making tidy profits from this all of which show up in losses booked for the taxpayer by the Queensland Power Trading Company which could buy power much cheaper in the new open market.
Then we have the issue of Community Service Obligations in which the Queensland Treasury agrees to compensate government-owned distributors such as Energex and Ergon for electricity supply that is not strictly commercial. The cost of this has spiralled in the past two years.
BANANA BENDERS GO MAD BUILDING NEW STATIONS
The other extraordinary development in Queensland is the government’s decision to build or underwrite the construction of a further 3000MW of capacity – equivalent to about half of Victoria’s daily needs. NSW already has almost this much in surplus capacity and the 300 kilometre extension cord between the two grids is only months away from completion.
GAS PIPELINE IS DEAD
And in the process the government is effectively killing the much-antipicated gas pipeline between Gladstone and PNG involving Chevron and AGL.
This pipeline is completely uneconomic without gas-fired power stations in and around Gladstone. But the government’s decision to push ahead with coal-fired expansions at Callide A and Tarong, when combined with new private plants being built by US company Intergen at Millmerram and Energy Equity’s planned gas plant at Barcaldine, makes the pipeline totally unfeasible.
It seems the Queenslanders are so parochial that they could not tolerate the concept of importing “foreign” power from NSW or PNG for that matter.
MEDIA LETS BEATTIE OFF THE HOOK
Instead, the Beattie government has committed to spending billions unnecessarily. Amazingly, the media is giving huge coverage to tiddler deals such as the $257 million QLD TAB float and Beatttie’s push for $100 million in Federal forestry compensation. Yet when it comes to billions being squandered in the power industry, the media just doesn’t bother to investigate.
VICTORIAN PRESS LET THE SECV RUN AMOK
The same applied in Victoria with the old SECV which employed 20,000 more workers than it needed, grossly overbuilt the system, constructed power stations we did not need, sold power to South Australia for 20 per cent of what it cost to generate and only made the power stations work about 70 per cent of the time.
The Melbourne media went missing on this as the gross mismanagement of the SECV cost several billion dollars. And who could forget the forests that were destroyed documenting the relatively small net $100 million dropped on the pick winners scheme in the VEDC.
COURT LOSS FINALLY BRINGS SCRUTINY TO NSW
The same applies in NSW where the Carr government has cost taxpayers literally billions of dollars by failing to knock the electricity industry into shape and then sell it at the right time as Jeff Kennett and Alan Stockdale did in Victoria. The incompetence over things like the $300 million Redbank power station in the Hunter Valley and the buy back deal with Dick Pratt’s Visyboard over a cogeneration plant at Smithfield were also under-reported. It wasn’t until Pacific Power got walloping in the Supreme Cout over its electricity trading that the media, largely thanks to Ivor Ries at the Financial Review, woke up to the scale of the problem. Fairfax chief executtive Fred Hilmer was chairman of Pacific Power at the time but there does not seem to be too much concern that these contracts could cost taxpayers up to $600 million.
MORE POWER STATIONS FOR VICTORIA – YOUR JOKING
It is an even bigger joke than Steve Bracks has flagged the possibliity of Victoria building another government-owned power station after the recent power crisis. Who needs it when Queensland is blowing billions doing this. Just upgrade the interconnect with NSW and take their power Steve next time your union friends pull a strike.
STICK THE EXTENSION CORD UNDER BASS STRAIT
We are also getting very close to D-day on the $450 million Basslink project linking Victoria with the Tasmanian grid. The engineers love this one because it would be the longest undersea power cable in the world. It would also give Victoria further back up supply during the next heat wave that coincides with industrial action at one station and plant failure at another. However, National Party heavyweights Peter McGauran and Peter Ryan are doing their level best to scuttle this project by insisting the transmission lines be put underground.
Amcor chairman Stan Wallis and his wealthy neighbours had the power lines put underground in leafy Monomeath Avenue, Camberwell, but you must remember this is about eight times as expensive as running them above ground. Does Victoria really need to see another big project fall over just for the sake of aesthetics?
YANKS TO DROP $500 MILLION AT LOY YANG A
For all that is said about power privatisation in Austalia, the fact remains that Victoria pocketed $29 billion from foreign companies who have now done their shirts on massively overcapitalised generating assets.
The decision by US giant CMS Energy to sell its 50 per cent stake in Victoria’s giant 2000 MW Loy Yang A power station will probably see them take a loss of up to $500 million on a two year investment. Ouch.
The banks have all the aces with the $3.5 billion debt and will insist that any buyer completely refinances and injects more equity to reduce the risk carried by the banks on this $4.8 billion purchase. Isn’t it amazing to think that Macquarie Bank made up to $40 million advising on this deal. CMS and its 25 per cent partner NRG should ask for their money back.
Meanwhile, Victorians are enjoying lower electricity prices and no longer have a $33 billion debt hanging over their heads. And the Labor governments in NSW and Queensland seem to have learnt very little from the whole exercise.
The footy’s on and everyone – put’s politics to rest
And no one cares two hoots if we – keep feathering our nest.
I’ve got the city press on side – the budget’s in the black
I’m building Docklands Stadium – the Grand Prix’s right on track,
With all I’ve done for Melbourne, why would they vote for Bracks”
Then East Timor hit the fan – it was like a gift divine
It took up all the news space – Bracksy hardly got a line
And Jeffrey’s mates were confident that he was doing fine.
But Jeffrey heard a little voice – it came from far away
“Out in the bush, were hurting,” were the words it seemed to say
But Jeffrey just dismissed it with “We’ll fix that up – some day
But the city must come first and all our wishes met.
What’s good for us is good for you – that’s something you forgot
And Melbourne has a lot of things that need doing yet.
It really is unreasonable that you should think that we
Should pay for your resources that we know you get for free
And if you use our City Link, then you should pay a fee.
It’s for your good we dig those holes that mar the country side
And build those lines and pylons that wander far and wide
You should be grateful for those jobs – and smog that we provide.
Our rivers too, are there for you – to care for and admire.
To pay the rates like all your mates should be your heart’s desire
But when we pinch the water, – why does it raise your ire?
You think the Thompson River should – feed the Gippsland Lakes
Or be used for irrigation as its way it makes
But environmental folks like us don’t fall for those mistakes.
We really need to wash our cars, and flush our gutters clean
To water all the gardens and keep the lawns green,
That precious water isn’t yours – that thought is quite obscene.
We don’t need your vegetables – or your milk and meat,
We’ll get it from New Zealand if the market you can meet
It’s not our fault if our demands mean you can’t compete.
The mighty Snowy River flowed – from mountains to the sea
The Lord above had made a blue – as all could plainly see
So we sent it all inland – and made electricity.
Your oil and gas we take for free and we wonders why
The price you pay for gas and fuel is so very high
Some day – some how, we’ll fix that too – as pigs go flying by.
With comfort spreading words like these, the Premier sallied forth
With all the editorials extolling his great worth
“He cannot lose”, “Perhaps a swing”, “A seat or two at worst”
The big day came – the votes were cast – then the counts began
The “experts” made predictions just the way the papers ran
They did not sense the anger of the man upon the land.
At end of day they could not say who’d be the government.
They still thought it would be Jeffrey, to whom “a message had been sent”,
He could try – eat humble pie – perhaps his ego dent.
Then in the east there rose a star – like many moons ago.
The votes in far Gippsland East, to the Nationals said “No,
We want better treatment here – and to see the Snowy flow.”
After several days under constant gaze, the final figures showed
Craig Ingram was the victor and the Nationals had been cowed
For 80 years they held the seat but the seeds of change were sowed.
There was horror down in Melbourne with all the “ifs” and “buts”
When the newsmen found that they had lost the plot
And their editorials thundered that some one – some where blundered
and the Man from Cabbage Tree would call the shots.
So they bleated and entreated for their power would be defeated
If they could not bludgeon Craig to back their cause.
They wanted Libs in power and the country folks to cower
Like yokels paying deference to their lords.
And in the coalition faced with power devolution
They could not see the problem that had caused the rural slide
And heads began to roll like there’d been a revolution
But you cannot serve two masters when their interests collide.
The pendulum had swung – in the center it was hung
The time to use your power for all your worth
But the Nationals missed out – they had used up all their clout
When the Liberals did not need them at the coalition’s birth.
There must be something wrong – its been going on too long
Where rural folk are treated – like the serfs of long ago.
For country folk do care – they only want their share
Of the riches that this nation does bestow.