The Hon. M. J. GALLACHER: My question without notice is to the Treasurer, and Vice-President of the Executive Council. Given that the taxpayers of New South Wales have lost in excess of $100 million in the past week through the Powercor ruling and Integral Energy’s trading result, what will the Labor Government do to ensure that those events are not repeated? What will the Treasurer and his shareholding colleague, the Special Minister of State, and Assistant Treasurer, do to ensure more accountability and responsibility by boards and directors of State-owned corporations? Will the Treasurer apologise to the taxpayers of New South Wales for the $100 million that will not come their way because of the abovementioned cases?

The Hon. M. R. EGAN: It is very dangerous for the Leader of the Opposition to speculate on possible losses in this matter. As I pointed out in an answer to the House last Thursday, the impact of the Victorian Supreme Court’s decision, as I understand it, is that Powercor will have to pay to Pacific Power, over the next 10 years, in the vicinity of $600 million in return for the supply of electricity. People may speculate whether that is a good or a bad deal; but over time it will depend on the spot price of electricity.

The actual financial impact of the case at the earliest may be known if the court decides to award damages only. Alternatively, the overall gain or loss to Pacific Power will not be known until the last contract has run its course. Subsequent to the Victorian Supreme Court’s decision on Friday, I wrote to the Auditor-General, Mr Bob Sendt, as follows:

Dear Mr Sendt

As you may have become aware Pacific Power has been the object of an adverse finding in litigation with Powercor Australia Ltd in the Supreme Court of Victoria.

The Court considered the issue as to whether 12 contracts allegedly made between Pacific Power and PowerCor between late 1997 and mid 1998 were valid and enforceable.

In coming to his decision his Honour, Judge Gillard, considered in some detail the operational processes and controls exercised by Pacific Power in conducting its forward sales activity.

I believe the issues that gave rise to litigation warrant your scrutiny, not only in the context of any future General Audit of Pacific Power, but also as grounds for undertaking a Special Audit under the provisions of Section 38B of the Public Finance and Audit Act. The scope of this audit could sensibly cover both the procedures and processes undertaken by Pacific Power to trade energy and the current nature of their forward book.

Today the Opposition has given notice of a motion.

The Hon. J. H. Jobling: You don’t support it.

The Hon. M. R. EGAN: I have indicated to the Hon. J. H. Jobling’s colleague the Hon. D. J. Gay that I might very well support it.

The Hon. J. H. Jobling: That is the first smart thing you have said all day. The only smart thing.

The Hon. M. R. EGAN: If the honourable member had conferred with his colleague he might have been privy to the information I conveyed to him earlier in the day.

The Hon. J. H. Jobling: You said "might".

The Hon. M. R. EGAN: Yes, that is right, because I will study it. It might have been private, but I am not sure whether it was meant to be confidential, and there is a difference.

The Hon. J. H. Jobling: You clarified it. I will talk to him about it now.

The Hon. M. R. EGAN: The honourable member is most welcome to do that. It is appropriate that the Auditor-General examine the matter and, as I indicated, I see merit in the motion of which the Hon. D. J. Gay has given notice. This afternoon I will study the terms of his motion. At first glance, however, I will consider moving an amendment to the effect that a parliamentary committee inquiring into these matters should await a report from the Auditor-General, which would assist it in its inquiry.

It is also important to see this matter in the context of record distributions being paid to the taxpayers of New South Wales by the electricity utilities. In the four years prior to the commencement of the reforms undertaken in 1995 and subsequently, in other words, the disaggregation of Pacific Power, the merger of 26 distributors
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throughout New South Wales and the entry into a competitive market, the average distribution to taxpayers each year was $590 million. In the four years since the reforms distributions have risen to an average of $894 million, which is roughly a 50 per cent increase. That is an impressive increase.

The Hon. J. J. Della Bosca: I am impressed.

The Hon. M. R. EGAN: I knew the Deputy Leader of the Government would be impressed, but what is even more impressive is that it has happened at the same time as savings of almost $1.5 billion have been passed on to electricity consumers in New South Wales; not only household consumers in real terms but also business consumers, which is very important.

An average New South Wales family pays about $82 a year less than a comparable Victorian family. An average small business in New South Wales pays 32 per cent less for power than its Victorian equivalent. That is a saving for a small business of about $3,200 a year. Notwithstanding these very significant price reductions, the government-owned electricity industry in New South Wales is returning very significant distributions, some 50 per cent higher than they were in the four years prior to the Government coming to office.