John Kaye speech against the Ports Assets
(Authorised Transactions) Bill 2012
Friday
23 November 2012
Dr JOHN KAYE [4.23 p.m.]: Here we go again, another dodgy sell-off, another
squandering of public assets, another handing over of crucial economic
infrastructure to the private sector in order to secure a quick grab for cash
by the O'Farrell Government at the expense of the future of the community, at
the expense of the future of the economy and at the expense of the future of
the environment. The Greens oppose the Ports Assets (Authorised Transactions)
Bill 2012 and will vote against it. If through some misfortune it gets through
the second reading we will seek to amend it in Committee. This legislation more
or less mirrors all the other pieces of privatisation legislation that we have
seen come through this Chamber under this Government and its predecessors. Each
and every one of them is nothing but a short-term grab for cash, nothing but a
ratings agency driven approach to economics that leaves any independent,
intelligent observer asking: Why would you sell-off an income-earning asset
which has an income stream that can inevitably support the State's finances?
There
are at least six key reasons why The Greens oppose this legislation. The first
is that it is simply dodgy economics, driven by the thoroughly and
comprehensively discredited rating agencies and the fetish of the triple-A
rating. This is handing over a long-term income stream for a short-term hit of
cash.
Secondly, this is privatisation of the profit-making aspects of the
ownership of the two ports while maintaining the expenses, risks and
liabilities in public hands. Thirdly, it is a loss of control of our lifeline,
the lifeline of the community of New South Wales to the global economy. Whether
we like it or not, governments have made us part of the global economy. Our
umbilical cord, our clear connection to that global economy, is through the
ports at Port Kembla and Botany, yet they are to be handed over to private
sector decision-makers whose only interest is their corporation's bottom line
and who have no commitment to the long-term economic, environmental or social
health of our community.
Fourthly, there will be massive impacts on the
environment, on traffic flows, on local communities and on heritage.
Fifthly,
the process by which this legislation will secure passage through the Chamber
is not only damaging to the reputation of New South Wales; it is damaging to
the very essence of government.
Sixthly, there is huge public opposition: the
public does not want the ports privatised. This was never mentioned during the
election campaign. The Government has no mandate for this but is pushing ahead
with it. Despite opposition from the union movement, opposition from the
community, opposition from business and opposition from every sector of our
society saying this is bad, the Government pushes ahead, with the community
having no opportunity whatsoever to have a say.
I will deal one at a time with
each of those issues. It has been argued that we need to sell off an
income-earning asset in order to invest in infrastructure—the new El Dorado of
public policy, that you have to get money into infrastructure and in order to
do it you eat yourself. You sell off your old infrastructure to purchase new
infrastructure. The problem is quite straightforward. It has been illuminated
by a number of economists who have said very clearly that the numbers do not
stack up: the arithmetic does not work. For example, Port Kembla shows a
profit—not a dividend—of about $50 million a year. We are told it is to be sold
at a price of about $500 million a year. That is the same ratio we saw for the
electricity industry that Labor tried to privatise. It is the same ratio we are
seeing for electricity assets that the Coalition is trying to privatise. It is
the same ratio with ports.
The problem is that the real rate of interest, the
above inflation rate of interest for governments, is about 2 per cent. At a 2
per cent real rate of interest and an income stream of $50 million a year we
can borrow $2.5 billion of capital. That is to say, public ownership of Port
Kembla alone—that does not include Port Botany yet—would enable us to borrow
$2.5 billion and service it from the profit that comes out of Port Kembla. That
is five times the current sale potential.
The difference is quite
straightforward. Because of our collective economic might, because we are a
sub-jurisdiction of the Commonwealth, because we are a part of a
trillion-dollar undertaking, our capacity as a State to borrow collectively is
far greater than the capacity of an individual corporation.
Our rating, our
credibility as a borrower, is far higher, so the risk premium is lower so the
interest rate we get is lower. Therefore, we can afford to borrow more against
that income stream than any private sector investor. It is worth more in public
hands than it is in private hands. The problem I have outlined at Port Kembla
is probably three times larger at Port Botany. This is not just a $2 billion
squander; it is probably more like a $6 billion or $8 billion squander of
long-term public wealth and public assets. It is a giveaway of an income-bearing
asset for a quick grab of cash. But this is not just about ports; this is about
all privatisations. The most successful privatisation was Jeff Kennett's
electricity assets sell-off in Victoria—successful in that it was shameful and
cost the people of Victoria greatly in the long run. Whenever one talks about
privatisation the right wing always says, "Oh, yes, but what about
Victoria? How well did we do in Victoria?"
The gross proceeds were about
$20 billion even in the most so-called successful privatisation in this
country. At a 6 per cent interest rate, which was about the real bond rate at
the time, using that sum of money to repay debt would have required about $1.2
billion a year. The Victorian State Electricity Commission's earnings before
interest and tax in its last year of operation were $1.202 billion. The sale of
the Victorian electricity industry gained nothing for its economy, and
everybody quotes that as the most successful example. Every other example,
including Labor's gentrader privatisation, has been a net loser. The 99-year
lease of these two ports will be a massive net loser to the tune of $6 billion
to $8 billion a year. But this sale is being driven by the rating agencies. We
are told, "Oh, goodness gracious, we can't borrow more money or we will
lose our beloved triple-A rating"—given to us by rating agencies that have
been thoroughly discredited by their ratings-for-sale scandal that brought the
world's economy to its knees.
The rating agencies scandal triggered the global
financial crisis, brought down 100-year-old American financial institutions and
destroyed southern European economies. Those same ratings agencies—the spivs in
sharp suits—with those same corrupt individuals are driving economic policy in
New South Wales to sell off public assets. There simply is no case to heed the
ratings agencies. After the discredited collateralised debt obligations scam we
should not listen to rating agencies. They should be driven out of town for the
damage they have done to our economy. The cost of losing our triple-A rating,
if anybody pays any attention to it, is not great—tens of millions of dollars
in a budget around $30 billion to $50 billion. Compared with the long-term
benefits of maintaining public ownership, whatever short-term costs are
associated with losing the triple-A rating are irrelevant.
Any sensible
measure of the credit worthiness of our State would consider owning an
income-bearing asset a positive outcome and would regard utilising that asset
to the maximum advantage of the community and maintaining it in good health for
the future of our community as something that should be rewarded, not punished
by a downgrading. We simply should not listen to the rating agencies. We should
drive economics in this State as if we really care about the future, not as if
all we care about is a couple of spivs in sharp suits who have destroyed the
economy around the world. It may be argued—we have not heard it yet—that we
need to get these ports into private hands because private sector ownership is
more efficient.
What utter, ideological nonsense. Nobody can argue that Port
Kembla or Port Botany is poorly managed—they compete on a world scale as
well-managed ports that use their assets efficiently. Privatising these ports
will give no efficiency gain. On the contrary, the losses will be in efficiency
as the corporations' focus moves away from serving the community to maximising
profit. The second reason for opposing this legislation is that it is a classic
case of selling off the profit-making activities and keeping the risk,
liabilities and costs in public hands. That is written clearly in this
legislation. Section 3 defines a ports asset to mean, amongst other things, the
assets, rights and liabilities of a port State-owned corporation—a port SOC. So
it includes liabilities. Section 4 (1) states:
▪
This Act authorises the transfer
of ports assets to the private sector or to any public sector agency ...
Written in black and white, this
legislation enables the Treasurer of New South
Wales, Mr Mike Baird, to force
the liabilities on to a public sector agency. The
Government has admitted
already in Questions and Answers that Sydney Ports
Corporation and Port Kembla
Ports Corporation will retain the most expensive
activities—marine safety,
emergency pollution response, harbour master and
marine pilots, vessel traffic
control, navigation buoys and markers. But the benefits
and joys of owning the
lease over the ports and making income will be privatised.
All this bill does
is privatise the profit-making activities. Even the Port Botany
landside
infrastructure will be maintained in public hands. That is what the
Government
is telling us it will maintain in public hands, but what will be in the
lease
that Mike Baird signs? What stinkers will be buried in that lease? Will the
clean-up costs remain in the lease? Will the repair of damage done to the
ports'
landside be included? Will landside chemical spills be included? What
equivalents to
liquidated damages and market and maintenance risks that the
previous
Government kept in public hands with its gentrader transaction will be
in this
transaction?
We have seen it before and undoubtedly we will see it
again. At the very least the
Government should be honest and fully capitalise
any risks and liabilities kept in
public hands. It should also be upfront about
capitalisation of those costs.
The third
reason for opposing this legislation
is that it involves a loss of control over key
economic assets. New South Wales
is part of a globalised economy. For better or
worse, we are an import/export
State. The Illawarra in particular lives and dies
economically on its capacity
to generate earnings that go out of the region and
State. This legislation
hands over the aorta of New South Wales to private sector
operators who simple
care only about their profit bottom line. They have no
concern about the future
of the State, and no concern about making sure that
investments at the ports
secure opportunities for investment, job generation and
the future of our State.
The Illawarra faces three significant economic challenges at the one time. It
must
address rising youth unemployment, bring down its very high carbon
footprint and
compete with the ports of Sydney and Newcastle for freight.
Port
Kembla needs a
$700 million investment or it will become a complete backwater.
At the same time
this legislation creates the risk that the leases over Port
Kembla and Port Botany will
be held in single hands. That means that the new
lease operator will be tempted to
run Port Botany as an overflow port, not the
lifeblood of the Illawarra economy, and
not the unique monopoly infrastructure
that generates jobs, opportunities, and new
import and export opportunities.
Port Botany will be nothing but a backwater. This
legislation will enable some
dark scenarios. The lessees of Port Kembla and Port
Botany, whether foreign or
domestic, could put all containers through Port Botany
and have no container
facilities at Port Kembla.
Port Kembla would be relegated to
car imports and
exports of bulk commodities such as coal and wheat without any
add-ons for the
economy of Port Kembla.
This is a dark scenario for the future of Port Kembla
and the Illawarra and one
which The Greens will not tolerate. The Greens will
do everything possible to stop
its occurring. The same is true with Port
Botany. Handing over this State's key
infrastructure to private operators makes
no economic sense. There are real issues
with the environment, heritage and
traffic associated with privatisation. Lifting the
cap at Port Botany means
that local residents will have inflicted on them massive
increases in noise, a
reduction of amenity and the environmental impact of
additional traffic.
That
cap is not being lifted because it is in the best interest of the State but
because it maximises the asset sale price. It sacrifices the welfare of local
residents
to fatten up the asset for sale. Later in the debate my colleague the
Hon. Cate
Faehrmann will talk of that in greater detail.
I turn to the dodgy
process by which
this legislation is securing its passage through the upper
House. It is clear the bill
being debated today, on the last day of sitting for
Government business, after it sat
on the Notice Paper for one month, is because
a deal has been made with the
Christian Democratic Party and the Shooters and
Fishers Party. The Christian
Democratic Party clearly does not care about the
future of the Illawarra or the
future of the State. The Christian Democratic
Party is purely interested in its own
power and maintaining the alliance with
the Shooters and Fishers Party. It is a party
that should not call itself
Christian because it does not show Christian concern—
The Hon. Paul Green: Point of order: That is a gross insult and very misleading.
The
Christian Democratic Party loves the South Coast.
Dr JOHN KAYE: To the point of order: There is no point of order. I have insulted a
party not an individual, just as Mr Gay continually insults The Greens. I am
doing
the same.
The ASSISTANT-PRESIDENT (Reverend the Hon. Fred Nile): Order! The member
is specifically referring to the two members of the
Legislative Council who are
members of the Christian Democratic Party.
Dr
JOHN KAYE: Further to the point of order:
I could put the same argument; that
the Minister for Roads and Ports continually
refers to the five members of The
Greens in the upper House.
The
ASSISTANT-PRESIDENT (Reverend the Hon. Fred
Nile):
Order! The member can take points of order on that.
Dr JOHN KAYE: They are
never held up. I hear the ruling. A deal has clearly been done.
The deal involves
cruel and dangerous duck shooting that will undermine the
future of our
environment. It reflects badly on the Government. The practice of
deals being made
with the right-wing crossbench is a monster created by the
previous Government
and it has been exacerbated by this Government. Finally,
this legislation is not in
the public interest. A petition of 10,000 signatures
was lodged today in the
Legislative Assembly, from a population of 408,000 in
the Illawarra. I move the
following amendment:
1. That the question be amended
by omitting all words after "That" and inserting
instead:
▪
a select committee is appointed
to inquire into and report on the provisions of
the Ports Assets (Authorised
Transactions) Bill 2012.
▪
▪
2. That the committee consist of
seven members comprising:
▪
(a) three Government members
▪
▪
(b) two Opposition members, and
▪
▪
(c) Paul Green and John Kaye.
▪
▪
3. That the Honourable Paul
Green be the Chair of the Committee.
▪
▪
4. That the Deputy Chair of the committee
be elected at the first meeting before proceeding to any other business.
▪
▪
5. That notwithstanding anything
contained in the standing orders, at any meeting of the committee four members
will constitute a quorum, provided at least one is a crossbench member.
▪
▪
6. Unless the committee decides
otherwise, a member of the House who is not a member of the committee may take
part in a private meeting of the committee but may not vote, move any motion or
be counted for the purpose of any quorum or division.
▪
▪
7. That a committee member who
is unable to attend a deliberative meeting in person may participate by
electronic communication and may move any motion and be counted for the purpose
of any quorum or division, provided that:
▪
(a) the Chair is present in the
meeting room
▪
▪
(b) all members are able to
speak and hear each other at all times, and
▪
▪
(c) a member may not participate
by electronic communication in a meeting to consider a draft report.
▪
▪
8. That the committee report by
Tuesday 16 April 2013.
Ports privatisation was never mentioned during
the election campaign. Following the petition of 10,000 signatures lodged today
in the Legislative Assembly—well over the threshold set by the O'Farrell
Government for public interest—and that the Government does not have a mandate
and— [Time expired.]