NSW finance minister John Della Bosca has just spewed out the greatest
load of garbage about the Snowy privatisation backflip as he repeatedly
claimed on The World Today that the float couldn’t proceed without the Commonwealth.

This is complete rubbish because the NSW Government initially announced
its sale of the 58% stake without any reference to Victoria’s 29% stake
or the Federal Government’s marginal 13% stake.

Of course the float could have proceeded with the Feds retaining 13%.
It was pulled because of the political realities, something Della
repeatedly denied.

Della Bosca also claimed that Snowy Hydro desperately needs capital –
between $300 million and $1 billion over the next five years – and was
now condemned to a slow death without the float.

Bollocks. Snowy Hydro was being valued at $3 billion and only carries
$600 million in debt. It has plenty of balance sheet capacity to borrow
for any capital expansion program and the three government shareholders
could simply forgo dividends for a while if it really is hard up for
capital.

The business generated revenue of
$440 million in 2004-05, the last available accounts, and produced a pre-tax profit of $199 million,
down from $215 million in 2003-04. A $100 million dividend was paid
out, which is hardly the action of a $3 billion company servicing only $600 million in debt and supposedly hard up for capital.

However, Della was right about one thing. If John Howard is so keen for
the Snowy to remain in public hands, the Feds should buy the 58% NSW
stake. Given that the Future Fund is about to have $30 billion in cash
looking for a home, this isn’t as stupid as it sounds, although the
credibility of any Telstra or Medibank Private sell-off would be
undermined ever further by such a move.

Peter Fray

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Editor-in-chief of Crikey

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