On Thursday 28th August, NSW Parliament was recalled to vote on the Electricity Industry Restructuring Bill 2008. The Bill was set for defeat in the Upper House following the Opposition’s decision to oppose the privatisation. The Government adjourned the debate on the Bill until Parliament resumes on the 23 September.
On Friday 29th August, the Premier announced a revised plan, which involves selling off the state’s three electricity retailers – Energy Australia, Integral Energy and Country Energy. The development sites for new generators will also be sold, with the Government hoping the private sector will not be deterred by having to compete with a public-owned utility. The revised plan differs from the original proposal in that the power generators would remain completely under the State’s control. This measure can be achieved without a vote in State Parliament, thus sidelining the Coalition’s opposition.
The defeat of the Electricity Industry Restructuring Bill has left a $20 billion gap in NSW’s medium-term capital spending program. As the Owen Inquiry into the Electricity Sector found an electricity generator is needed by 2014, the only other option is for the State Government to build it at a cost to taxpayers of approximately $15 billion.
Ratings agency Standard & Poor’s has placed NSW on credit watch following the scuttling of the sale. As a result, the Treasurer, Michael Costa, will introduce a mini-budget in early November. The mini-budget is expected to include privatisation of rail maintenance, partial privatisation of Sydney Ferries, a restructure of the NSW public sector and job cuts for bureaucrats.
For more information contact your Hawker Britton consultant.