❓ Mr. Johnston questions the Minister for Energy on the reason for a change in position regarding the merger of Verve and Synergy. The Minister defends his position by highlighting the risks to taxpayers due to the current market structure and Synergy's financial vulnerability.
AnsweredQoN 43Legislative Assembly
QuestionView source ↗
SYNERGY
AND VERVE — RE-MERGER
43. Mr W.J. JOHNSTON to the Minister for Energy:
My supplementary question is very simple: what was it in the
two weeks between 26 March and 10 April that made the Minister for Energy
decide to change his position on the merger of Verve and Synergy?
AND VERVE — RE-MERGER
43. Mr W.J. JOHNSTON to the Minister for Energy:
My supplementary question is very simple: what was it in the
two weeks between 26 March and 10 April that made the Minister for Energy
decide to change his position on the merger of Verve and Synergy?
AnswerView source ↗
It is a very good question and I will answer it. As I said
before I was so rudely disrupted, I support privatisation. I support market-based
systems. I support private investment in the electricity industry. I support
the many private firms that have invested in electricity, and I welcome others
to do so in the future. But our system here has a major flaw—a flaw
that the member for Cannington has not recognised. I have gone through some of
his speeches and statements in the press on this. One of the key issues is
that, unlike on the eastern seaboard—I argued this in detail yesterday
but I reiterate it now—the private sector has invested heavily in the
electricity industry here to the tune of $3 billion over the past six years.
They are very large investments. It has displaced Verve, the state-owned
generator, to a large extent. Verve's share of the market has gone down
substantially from nearly 90 per cent towards 50 per cent.
I highlight an oddity in the Labor Party's position
on this. The Minister for Health just asked the Labor Party to get real and to
support contracting out in the hospital system; now the member for Cannington
is lambasting me for not urging more privatisation in the electricity industry.
Several members interjected.
Dr M.D. NAHAN :
That is Labor. It will take a stand. It has no principles. But I digress.
Mr D.A. Templeman :
It's like when Colin gave you the motion and told you that this is what
is happening. That's what really happened in the cabinet room. Tell the
truth!
Dr M.D. NAHAN : Can
I have some help from the noise in the corner?
The SPEAKER :
Member for Mandurah, I call you for the second time!
Mr J.R. Quigley :
You were told to abandon your principles and toe the line!
The SPEAKER :
Member for Butler, I call you for the first time!
Dr
M.D. NAHAN : As the Minister for Energy, I get to know the industry much
better. I quickly realised that there are some serious flaws in the industry.
The member for Cannington has said that he likes private investment in this
sector because it takes the market risk. The problem with this industry is that
the private sector builds the power plants and it takes the construction risk,
but the market risks in price and quantity are all borne by Synergy. Synergy's
market share is 80 per cent. Members should read the Economic Regulation
Authority reports. Everyone warns that Synergy's risk profile is very
high; and, if something happens to shock this industry, it will be borne
overwhelmingly by Synergy. Synergy is owned by whom? It is owned by us—that
is, taxpayers. What does Synergy's balance sheet look like? It has a
profit of $14 million and sales of $2 billion, but no assets.
Ms R. Saffioti : Unless
you sell it.
Dr M.D. NAHAN : Is
the member for West Swan proposing to sell Synergy?
The SPEAKER :
Minister for Energy, wind this up, please.
Dr
M.D. NAHAN : I looked at this and the major task I have is to safeguard
taxpayers from the failure of the Labor Party's deregulation.
Several members interjected.
The SPEAKER :
Members!
Dr M.D. NAHAN : I
have a responsibility to safeguard taxpayers from the Labor Party's
deregulation. What will we do in the future?
Several members interjected.
The SPEAKER :
Members!
Dr M.D. NAHAN :
Will we repair Labor's damage? Yes, as we have done in many areas and
as we did in this area last term.
before I was so rudely disrupted, I support privatisation. I support market-based
systems. I support private investment in the electricity industry. I support
the many private firms that have invested in electricity, and I welcome others
to do so in the future. But our system here has a major flaw—a flaw
that the member for Cannington has not recognised. I have gone through some of
his speeches and statements in the press on this. One of the key issues is
that, unlike on the eastern seaboard—I argued this in detail yesterday
but I reiterate it now—the private sector has invested heavily in the
electricity industry here to the tune of $3 billion over the past six years.
They are very large investments. It has displaced Verve, the state-owned
generator, to a large extent. Verve's share of the market has gone down
substantially from nearly 90 per cent towards 50 per cent.
I highlight an oddity in the Labor Party's position
on this. The Minister for Health just asked the Labor Party to get real and to
support contracting out in the hospital system; now the member for Cannington
is lambasting me for not urging more privatisation in the electricity industry.
Several members interjected.
Dr M.D. NAHAN :
That is Labor. It will take a stand. It has no principles. But I digress.
Mr D.A. Templeman :
It's like when Colin gave you the motion and told you that this is what
is happening. That's what really happened in the cabinet room. Tell the
truth!
Dr M.D. NAHAN : Can
I have some help from the noise in the corner?
The SPEAKER :
Member for Mandurah, I call you for the second time!
Mr J.R. Quigley :
You were told to abandon your principles and toe the line!
The SPEAKER :
Member for Butler, I call you for the first time!
Dr
M.D. NAHAN : As the Minister for Energy, I get to know the industry much
better. I quickly realised that there are some serious flaws in the industry.
The member for Cannington has said that he likes private investment in this
sector because it takes the market risk. The problem with this industry is that
the private sector builds the power plants and it takes the construction risk,
but the market risks in price and quantity are all borne by Synergy. Synergy's
market share is 80 per cent. Members should read the Economic Regulation
Authority reports. Everyone warns that Synergy's risk profile is very
high; and, if something happens to shock this industry, it will be borne
overwhelmingly by Synergy. Synergy is owned by whom? It is owned by us—that
is, taxpayers. What does Synergy's balance sheet look like? It has a
profit of $14 million and sales of $2 billion, but no assets.
Ms R. Saffioti : Unless
you sell it.
Dr M.D. NAHAN : Is
the member for West Swan proposing to sell Synergy?
The SPEAKER :
Minister for Energy, wind this up, please.
Dr
M.D. NAHAN : I looked at this and the major task I have is to safeguard
taxpayers from the failure of the Labor Party's deregulation.
Several members interjected.
The SPEAKER :
Members!
Dr M.D. NAHAN : I
have a responsibility to safeguard taxpayers from the Labor Party's
deregulation. What will we do in the future?
Several members interjected.
The SPEAKER :
Members!
Dr M.D. NAHAN :
Will we repair Labor's damage? Yes, as we have done in many areas and
as we did in this area last term.
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