The Guardian 7 June, 2006
People power forces Snowy backflip
Bob Briton
Australians breathed a rare collective sigh of relief last week when the Federal Government announced that it had decided against selling off its share of the Snowy Hydro Scheme. The stunning backflip on the future of the jointly-owned scheme obliged the NSW and Victorian Governments to scuttle their privatising plans, also. All sorts of reasons for the turn-around have been advanced by commentators and different players have claimed credit but one thing is clear: the rapid mobilisation of public indignation is the source of the sudden change of heart on the part of the arch-privatisers in the Howard Government.
"I’m not a zealot about privatisation; that you sell everything under the sun, irrespective of the circumstances", Howard told the ABC last Friday. He tried hard to put this gloss on the decision despite the fact that he and his Ministers had been hyping the sale and attempting to neutralise the obvious objections to it.
Federal Finance Minister Nick Minchin inserted a 35 percent cap on total foreign ownership in the sell-off legislation. The headquarters would stay in Cooma. The 2002 legislation corporatising the Snowy Hydro scheme would remain in effect and (the Minister claimed) mean that flows to users downstream would be regulated on the same basis as is currently the case. Negotiations were underway with the Australian Stock Exchange to see whether a ban on individuals owning over 10 per cent of the Snowy shares could be enforced for more than four years.
However, while about 100,000 people registered their interest in buying the shares, few others were buying the reassurances. Farming communities were concerned about the effect of a private operator’s commercial interest on access to vital water supplies. Environmentalists were worried about the integrity of present undertakings to restore the Snowy River to 21 per cent of historic flows. Many were concerned about the higher electricity prices that would follow privatisation.
In addition to the economic and environmental concerns, the media and government were hit with expressions of horror that such an important historic icon could be sold off. The Snowy Hydro Scheme holds a special place in the hearts of Australians, particularly older generations.
During the 25 years (1949-1974) of construction more than 100,000 workers gave their all to this amazing project, 121 one of them gave their lives. Many were new immigrants and felt it was their contribution to building Australia, and still do today. They made life-long friends, and those who are still alive today are feel pride in what they have done. For decades school students have been studying and visiting what is one of the most complex and largest hydro electric operations in the world.
A group of 56 prominent Australians — including former Prime Minister Malcolm Fraser, poet Les Murray and actor Cate Blanchett — put a powerful appeal to the Federal, NSW and Victorian Governments on behalf of their sidelined electors. Protests against the sale took place in the Jindabyne, Tumut and Cooma areas. These townships had the additional fear of the loss of jobs and purchasing power in their local economies hanging over their heads. The Mayor of Cooma has announced that a celebration of the decision will held in place of a planned protest rally.
Other reactions to the Commonwealth’s back down have been varied. The Federal Opposition called on the Howard Government to follow through and pull out of plans to privatise Medibank Private and the remainder of Telstra. Federal Treasurer Peter Costello said that the move was evidence that the Government is in touch with the wishes of the people. "Given the concern in the public realm, the right decision has been made not to proceed with it", he said.
NSW Liberal, Senator Bill Heffernan was also talking up the Government’s democratic pretensions. However, he continued to embarrass his parliamentary colleagues with a proposal to make the Commonwealth responsible for the country’s water resources. Eventually, the Libs’ parliamentary secretary for water, Malcolm Turnbull, was called in to hose down the idea. "I don’t think there’s any prospect of a change of control over water other than by constitutional amendment. And that is not Government policy", he said.
NSW Premier Morris Iemma and Victorian Premier Steve Bracks have both said that the proceeds of the sale were not factored into immediate spending plans. However, Bracks did confirm that delivery of the full $600 million for school maintenance will take longer than previously promised. During much of the build-up to last week’s bombshell, Bracks had claimed to be an unwilling partner in the sale and a victim of pressure from the NSW and Federal Governments.
The short-circuited privatisation leaves a number of matters up in the air. NSW Finance Minister John Della Bosca wants the Federal Government to buy the State’s interest in Snowy Hydro. Neglect of the 40-year-old infrastructure has reportedly resulted in the need for costly maintenance to be done. Premier Iemma claims that the expansion of the corporation’s electricity generating capacity to meet increased peak power demand will cost roughly half a billion dollars. He says that he does not want NSW taxpayers to be forced to foot any of the bill. For some reason, a $3 billion asset which was extremely attractive to private investors is considered a thorough liability for the people of NSW.
In any event, people power has triumphed for the time being over some very long-term plans to privatise the Snowy scheme. Howard has been left to reassure prospective buyers of other assets that it is business as usual. He has hinted heavily that investment banks involved in preparations for the Snowy sell-off would be given something for their trouble.