Fiscal Responsibility Amendment (Privatisation Restrictions) Bill 2021

Published on: June 2022

Record: HANSARD-1323879322-126250

Fiscal Responsibility Amendment (Privatisation Restrictions) Bill 2021


I advise that I have received a written authority from the member for Kogarah and endorsed by the Hon. Daniel Mookhey, MLC, authorising the member for Macquarie Fields to move the second reading of the bill.

Second Reading Speech

Mr ANOULACK CHANTHIVONG (Macquarie Fields) (11:08:50):

On behalf of Mr Chris Minns: I move:

That this bill be now read a second time.

The Fiscal Responsibility Amendment (Privatisation Restrictions) Bill 2021 is all about ending the New South Wales Coalition's obsession with selling things that do not belong to it. It is about stopping this Government from pursuing its extreme right‑wing ideological agenda without consideration or thought for the longer-term economic and financial impact and the pain it will cause to consumers, households and our economy. When the Liberals run out of ideas, they just go to their ideology without thinking of the adverse consequences. That is low‑brow decision‑making based on a lack of analysis or understanding. This bill is about curtailing an economic agenda that makes Liberal Party donors and supporters rich while making the rest of us very much poorer. The bill holds the Government to the broken election promise made by the former Premier that there would be no more privatisations under a re‑elected Coalition government.

This bill is about accountability—a word this Government, with all its pork‑barrelling, rorts, rackets and excessive privatisation agenda, hates with a passion. As everyone now knows, this Liberal Government is exceptional at political spin and media management. As always, it is all spin, no substance and consequently no solutions. The Coalition has tried lots of different ways to market and manage the message of its privatisation agenda to make a somewhat bitter pill more palatable for an incredulous public. Let me give some examples. The former member for Bega, Andrew Constance, tried to call it a "silver bullet" for the economy. "Asset recycling" was the popular term used by former Premier Berejiklian. But nothing tops the current Premier's rhetorical overreach than his calling privatising public assets a "golden key" to opportunity for New South Wales.

When he talked about a golden key, he must have been assisting corporate boardrooms to prepare their profit statements rather than delivering the truth to the public. Acquiring a revenue‑generating business—usually in a monopolistic trading environment—is definitely an opportunity for some. Imagine this: It can be a golden‑key moment for corporate monopolies to make ongoing super‑normal profits at the community's expense. But it is certainly not a golden‑key opportunity for the hardworking and long‑suffering taxpayers of New South Wales, who inevitably pay so much more and always get so much less. Let us end all the fancy branding attempts and weasel words that try to soften what is an increasingly unpopular, discredited and inequitable economic policy agenda.

For more than a decade the Coalition has relied on asset sales to solve its cashflow problems. That is a bandaid solution to a large open wound that will never heal because it is the wrong solution. Nothing better sums up this stale and unimaginative administration than its continued reliance on privatisation to get it out of financial trouble and plug more than $20 billion of blowouts in its infrastructure projects. But after $93 billion in asset sales, it has left the public's cupboard bare—empty, nothing, zilch. A public asset can only be privatised once. Assets that generate revenue have been sold off, and the proceeds of sale have been spent on assets that do not generate revenue. In doing so, the Government has kicked the debt further and further down the road. It is now $100 billion‑plus and counting; it is going up and up. The New South Wales Government's privatisation gamble has created a debt balloon that will inevitably burst, with the cost falling on future generations. Our children will end up paying more for fewer and lower-quality services.

Life under the Liberal Government means paying more for less, full stop. Former chair of the Australian Competition and Consumer Commission [ACCC], Mr Rod Sims—formerly an enthusiastic proponent of privatisation—publicly warned the New South Wales Government about selling public assets. He said that it can create unregulated monopolies that hurt productivity and damage the economy. Ill‑considered privatisation without competition creates monopolies or monopoly‑like businesses that will use their market power to gouge the wages of hardworking consumers. Funny that—a privatised, profit‑maximising monopoly uses its unfettered market power to increase its profits. Who would have thought of that? The answer, said Mr Sims, is for governments to conduct public reviews of any proposed privatisations before selling off the assets, as is proposed in this bill. It is about better decision‑making for the public good, not for excessive monopoly profits.

The most appalling example of this Government's privatisation policy is the sale of WestConnex. The ACCC said clearly that we should privatise for efficiency—which involves ensuring competition—or not do it at all. Competition must exist. Privatisation should not be undertaken for a short‑term financial price, which inevitably the public will pay for in higher prices for no increase in value or benefit. The ACCC says not to privatise and create monopolies because it will hurt the economy and cause endless financial pain for households. So what does this Liberal Government do? It creates one. Transurban now owns all or part of the M2, the M4, the M5 South‑West, the M5 East, the M7, the M8, the Lane Cove Tunnel, the Cross City Tunnel, the Eastern Distributor and NorthConnex.

Right now drivers in Sydney pay more than $2.3 billion a year in tolls. Some families in my electorate and surrounding electorates are paying more than $6,000 a year in tolls—a crippling amount for most families, particularly in a high-inflation environment when the cost of living is going through the roof. For example, in my electorate Sala advised me that during the past quarter he spent approximately $700 in tolls just to drive to work. That is a tax on the commute to work. The Liberals always tax people more. They make people pay more, but they pay people less. Sydney is now the most tolled city on the face of the earth, with a toll network owned by a private monopoly that this Government created.

I turn to the substance of the bill. The Fiscal Responsibility Amendment (Privatisation Restrictions) Bill 2021 amends the Fiscal Responsibility Act 2012 to introduce minimum requirements where a public asset is nominated for privatisation. New section 8A requires that before all or any part of a State‑owned asset is sold or leased, several steps must first occur. First, both Houses of Parliament need to vote in support of the proposed privatisation. Secondly, a review of the sale needs to be conducted by a parliamentary committee. The committee will make recommendations to ensure a suitable regulatory framework and consumer protections can be achieved. If not, the committee can recommend the sale not proceed. The bill applies to State‑owned corporations, as outlined in subsection (6), including Sydney Water Corporation, Hunter Water Corporation, WaterNSW, Endeavour Energy, Ausgrid, Essential Energy, icare, the Transport Asset Holding Entity of New South Wales and the Forestry Corporation, Landcom, and the Port Authority of New South Wales.

I also make the point, which is consistent with former ACCC chair Rod Sims' public statement, that the bill does not preclude the Government from seeking to sell an asset. But for the sake of good corporate governance and public benefit, it does force the New South Wales Government to submit its proposals to public scrutiny. The bill forces the Government to listen to the views of workers, unions, industry experts, small business people and civil society leaders during a public inquiry. In other words, it forces the Government to be accountable to the public and the Parliament to ensure that public interest and public value are the only beneficiaries of privatisation. I commend the bill to the House.

Second Reading Debate

Ms FELICITY WILSON (North Shore) (11:18:02):

On behalf of the Government, I oppose the Fiscal Responsibility Amendment (Privatisation Restrictions) Bill 2021, which is a political stunt, sadly, by those opposite to use the guys of fiscal responsibility to damage the good governance of this State. The object of the current Fiscal Responsibility Act 2012, which the bill seeks to amend, is to maintain the State's triple‑A credit rating. It provides the fiscal targets and principles that are required to ensure good governance is carried out by the government of the day. In 2012 this Government introduced that Act after 16 long years of abysmal and irresponsible economic management of this State by NSW Labor. Who had a hand in that incredibly damaging period? It was none other than the current Leader of the Opposition, Chris Minns.

Fiscal responsibility is a core principle of this Government. It defines why the Government continues to manage our economy in good times and see it through the tough times, just as we saw throughout the COVID‑19 pandemic with key economic supports such as JobSaver.

The economic challenges of the pandemic, the recent flooding and other major events have made it clear why a fiscally prudent government needs to maintain fiscal responsibility, to ensure that we have the firepower needed when disaster strikes our communities. Fiscal responsibility means developing policies not only for the current needs of the community but also for future needs. It means ensuring that our spending, taxes and infrastructure investments are justifiable and sustainable. It would not have been possible for this Government to embark on the record levels of State‑transforming infrastructure that it delivered—building the roads, schools, hospitals and community infrastructure needed to secure the brighter future we need for New South Wales families—while also meeting the necessary challenges of bushfires, the pandemic and flood recovery without its highly successful asset recycling program.

It would not be possible for the people of western Sydney to have a $5 billion fund, WestInvest, if it were not for the visionary work of this Government in building and undertaking the asset recycling of WestConnex. Fiscal responsibility should not be a partisan issue. Both sides of this House should accept that this is a fundamental principle. However, only the Opposition could come up with amendments to existing legislation that would seek to diminish an Act with the objective of fiscal responsibility at its heart. Only the Opposition could make such a cynical attempt to claim the mantle of being good economic managers. In fact, there is great irony in the Leader of the Opposition having carriage of the bill. He claims now to be a warrior against privatisation. He has used his Twitter account recently to proclaim that privatisation does not work. The irony is that he follows it up with graphs about things like wholesale electricity prices when he is talking about the transactions around the poles and wires network.

What he clearly does not understand is that poles and wires only affect network costs. But even more embarrassing, and fundamentally hypocritical, is that Chris Minns was the chief of staff to John Robertson as the Minister for Corrective Services, and Chris Minns personally oversaw the privatisation of Parklea prison. That is right, Chris Minns himself signed off on the privatisation of Parklea prison. He then comes to this House and tells us that he opposes privatisation. What gets even worse for him is that the privatisation was incredibly disastrous, with a committee of the other place finding that the rushed contract did not adequately set key performance indicators for the private company to meet. We hear from the Labor Opposition what we have heard for many decades: saying one thing and doing another. When it comes to the massive failure of the Parklea prison privatisation and the hypocrisy in delivering it, the 2008 policy manifesto of the NSW Labor conference stated unequivocally:

Labor opposes the private contract management of prisons.


In 2008 on John Robertson said:

You can rest assured I won't be becoming an advocate for privatisation.

Less than a year later, John Robertson himself moved to privatise Parklea prison, and he said, "Well, it's not an ideological argument. What we are doing here is running an argument about how we get maximum efficiency." The problem was that he did not get maximum efficiency because he did not do it well enough. What we are seeing here is that Chris Minns, as the leader of Labor, has studied under the tutelage of John Robertson in saying one thing and potentially doing another. Chris Minns constantly states that he opposes privatisation but, on the other hand, has been the architect of privatisation when leading the office of a Labor Minister.

That is what Labor does. It is the continued history of Labor when it has been in government to say one thing and do another. Let us look at NSW Lotteries. We have heard from those opposite, including Ryan Park who has said, "We are not opposed to privatisation as a general rule, but we are opposed to selling income‑generating assets." But what did Labor do in government? In March 2010 Labor gave a 40‑year licence to run NSW Lotteries to the Tatts Group for almost a billion dollars, which was a kick in the guts for newsagencies and small businesses, and Labor had no mandate for that transaction. "In any event," a quote in the Herald said around that time, "there has been no suggestion that NSW Lotteries has done anything but a good job as an organ of government—a very nice little earner it has been, indeed."

Labor says that it would not sell income‑generating assets, but it does. We cannot trust Labor on any of the promises it makes, and we particularly cannot trust it on economic promises. Throughout the history of 16 long years of failure of the Labor Government in New South Wales, it could not manage the economy. So when Labor members want to amend the Government's legislation about fiscal responsibility, we know before they even start that in their DNA they are fiscally irresponsible. The truth about Chris Minns is that when he tries to undertake these types of initiatives, like the Parklea prison privatisation, it just does not work. He is not capable of doing it. He is a substandard administrator, and it is ironic and hypocritical that he is pushing these amendments about fiscal responsibility.

The proposed amendments in the bill are not fiscally responsible, which cannot be a surprise when they come from Labor. There are already robust existing safeguards with respect to asset recycling in existing legislation. Parliamentary review is already required for most potential asset recycling candidates via the necessity to pass enabling legislation or legislative amendment. This applies to all eight State‑owned corporations. It applies to any arrangement where a lease is granted over Crown land, and it applies to any concession granted to a private sector entity for a statutory function vested in a State body. Existing governance safeguards are robust and have demonstrated worth. We have seen that all sale proceeds have a well‑established and well‑tested governance structure overseen by a senior stakeholder steering committee. Members of the steering committee have deep transaction experience and can be relied on to make an independent recommendation to the relevant Minister.

The process is fully overseen by an external probity adviser, who provides a comprehensive report as part of the sales recommendation. In addition, the Audit Office is consulted throughout the process, and it provides impartial advice and scrutiny over the sales process. The reserve price—the price below which any offer will be rejected—is subject to significant expert scrutiny and is kept highly confidential to ensure integrity in the bidding process. Subjecting this information to a broad range of recipients fatally compromises the effect of that reserve price, and that is exactly what this amendment would do. It would undermine the State's ability to engage in commercial transactions. So which components of the existing governance safeguards does Labor want to get rid of? Does it want to get rid of the independence of the senior stakeholder steering committee's advice? Does it want to get rid of the external probity officer? Does it want to get rid of the Audit Office's consultation, reviews, advice and scrutiny throughout the process?

Does it want to get rid of the reserve price? It seems like it probably does, because when Labor was in government and it sold off assets, it did so without any of the robust governance mechanisms that this Government put in place to ensure appropriate outcomes for the people of New South Wales. Do we want to go back to those bad old days? Do we want to go back to a Labor government that delivered those kinds of failures for New South Wales? Not only could Labor not manage the sale of assets, but it also could not achieve outcomes for infrastructure delivery. So what the Liberal‑Nationals Government has done is ensure that it has addressed the $30 billion infrastructure backlog that Labor left in New South Wales. The Government's asset recycling has created value across our community. It allows us to build roads, schools, hospitals and infrastructure to ensure that New South Wales has a brighter future.

I ask those opposite: What do you want to cut that asset recycling has funded? Do you want to get rid of the $5 billion WestInvest Fund? Do you want to stop building hospitals? Which of the hospitals do you not want to invest in? Do you want to cancel the Nepean Hospital infrastructure investment? Do you want to cancel over 200 new and upgraded schools across New South Wales, just like the 90 schools Labor closed when it was last in Government? Which schools and which roads do you not want to proceed with the construction of? Do you want to cancel rail projects, like Labor had to do when it was in Government because it could not manage money? It wasted a billion dollars on the CBD to Rozelle metro, with no tracks laid and no rail delivered.

Labor had one project, the Parramatta rail link, but it had to be renamed because the rail could not get to Parramatta. It ended up being called the Epping to Chatswood rail link because it only went half the way and cost twice as much. You cannot call it a Parramatta rail line if it does not even get halfway to Parramatta.

Transcription in progress…

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