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Garnaut to provide cover for privatisation of Snowy Hydro?

Update: Kelly denies Govt considering Snowy Hydro sell-off from ABC Online News 11 Jul 08 (see below)

The Canberra Times has reported that the Rudd Labor Government is now planning to acquire the Snowy Mountains Hydroelectric Authority in order to privatise it. This is in spite of fierce public opposition which forced the previous Howard Government to abandon its own privatisation plans and Rudd's own pledge before the 2007 elections to keep it in public hands.

The Rudd Government maintains that it is "opposed to outright privatisation as such''. Instead, it plans to lease the Snowy Mountains Hydro-Electric Corporation to private industry. However, as NSW anti-privatisation campaigner Greens MP John Kaye pointed out in a media release of 10 July, "There is no practical difference between Kevin Rudd's long term lease and John Howard's sell-off. Both would see control of the water in the scheme pass out of public hands to large multinational corporations."

John Kaye has warned that if NSW Treasurer Michael Costa succeeds in the privatisation of NSW's electricity assets, in the face of the strong opposition of 79% of the NSW public, that the Rudd Government may well feel encouraged to proceed with the sell-off of the Snowy Hydro.

According to the Canberra Times, the, by now, wholly familiar rationale for privatisation has been offered, that is, that it has to be privatised in order for the $800 million in investment said to be necessary can be raised by the private sector. No reason as to why the money couldn't, instead, simply be raised directly by the government either from general revenue or through loans was offered.

An impetus to privatisation also come unexpectedly in last week's Climate Change Review Draft Report. The report made the claim that ownership of the Snowy scheme by three governments NSW, Victoria and the Commonwealth could restrict future development and competitiveness in the national electricity market.

However, local community opponents to privatisation pointed out that Garnaut had paid no regard to the fact that the Snowy Hydro was a regulator of water. As former chief engineer with Snowy Hydro, Max Talbot, had written in a letter to the Prime Minister earlier this year after hearing that privatisation was being considered, Snowy Hydro was ''worthless as a business'' without its water licence.

''The licence is weighted towards the use of water for electricity production and trading rather than optimisation of the use of the water as an invaluable resource for irrigation, communities and the environment.

''It does not adequately regulate Snowy Hydro and contains compensation clauses that would result in the payment of hundreds of millions of dollars by governments to private owners should the licence need to be amended during its 75-year term.'

So if privatisation, in the guise of a long term lease were to proceed, the Australian community may be faced the unpalatable choice of forgoing vitally needed water or paying prohibitively for an breach of contract to the private operators of the Snowy Hydro.

Alpine Riverkeepers spokeswoman Acacia Rose was also critical of the Garnaut report's comments on privatising Snowy Hydro.

''The Snowy scheme is vital for water security and must be re-positioned for water storage and management despite the recommendations of Garnaut that focus primarily on energy generation,'' she said.

With diminishing rainfall for south-eastern Australia there will be less water available for energy generation.''

The fact that Ross Garnaut has so inappropriately used his authority to promote privatisation when privatisation has had such a disastrous track record and when it has been so emphatically opposed by the public, may be cause to question his preference for market forces, even if operating within the constraints of his carbon credits trading scheme, as the solution to global warming.


The ABC reported on 11 July that Federal Member for Eden-Monaro Mike Kelly has put an end to speculation that federal Labor has done a backflip on its opposition to privatise Snowy Hydro.

In response to the abovementioned Canberra Times article Mr Kelly said that his Government has not changed its opposition and he stands by his election pledge to keep the corporation in public hands.

He claimed that the Canberra Times report was misleading.

Comment: The report didn't account for the inconsistency between the Federal Government's support for the privatisation of NSW's electricity and its professed opposition to the sale of the Snowy Hydro.

Appendix: Media Release for John Kaye, NSW Greens MLA

NSW power sell-off would renew Snowy Hydro privatisation push

10 July 08

The Iemma government's attempt to sell the state's electricity industry has become a test case for privatising the nation's largest hydro-electric and irrigation scheme, according to Greens NSW MP John Kaye.

Commenting on a story on page 1 of today's Canberra Times (''Snowy power may go private'

), Dr Kaye said: "Federal member for Eden-Monaro Mike Kelly has let the cat out of the bag.

"The Rudd government is carefully watching NSW Treasurer Michael Costa's push to sell off the state's retailers and generators.

"According to Mr Kelly, if Treasurer Costa is successful, the Commonwealth government will implement their secret plan to take over the Snowy and lease it out.

"It looks like a reincarnation of John Howard's privatisation plans that came to a sticky end in 2006 after massive public opposition.

"There is no practical difference between Kevin Rudd's long term lease and John Howard's sell-off. Both would see control of the water in the scheme pass out of public hands to large multinational corporations.

"The ante on the NSW sell-off has just been upped. The Iemma government's proposed sell-off is an environmental, social and economic disaster. It just got worse.

"The issue is no longer confined to the state's coal-fired power stations and retailers. It now includes Snowy.

"The state member for Eden-Monaro, Steve Whan, needs to get onto the phone to his federal colleague and reiterate the arguments he used in 2006 to oppose the sell off.

"No doubt Mr Whan will now be regretting his support of the Unsworth Inquiry recommendations to sell off the state's power industry.

"He will not be happy to see he has unwittingly become part of a renewed push to privatise Snowy.

"Mr Whan knows that this will be even more detested in his electorate than the already deeply unpopular power sell off," Dr Kaye said.

For more information: John Kaye 0407 195 455


Certainly the 'boys' network kicks in strongly with the Labor Party. They forget they are elected to represent people in the electorate, not further party goals.

However, privatisation of the energy sector and introduction of smart metering is all part of a global energy market where the really big players move to monopolise the sector and fix the price. Better option is to enable all households and business to have a high level of energy self sufficiency including energy efficiency where major power generators are back up and not main options.

The 'market' paradigm delivers for wholesale purchasers of energy and usually households will pay the highest costs again, small players supporting the big players.

I think the focus is wrong. We need to work towards reducing energy consumption and increasing efficiencies and enabling micro or local solutions.