Snowy Hydro, Neoliberalism and the NSW Government: The Ugly Visage of Privatisation Rears Again

Hazelwood power station in Victoria's LaTrobe Valley

Hazelwood power station in Victoria’s LaTrobe Valley

Australia’s energy policy is subject to regulatory and fiscal influence from all three levels of government, however only the State and Federal levels determine policy for primary industries such as coal.

Coal, natural gas and oil-based products are currently the primary sources of Australia’s energy usage, despite the fact that 38% of Australia’s total greenhouse emissions stem directly from the coal industry. In the year 2000, Australia was the highest emitter of greenhouse gases per capita in the developed world.

After the Second World War, New South Wales and Victoria began integrating the formerly small and self-contained local and regional power grids into state-wide systems, run centrally by public statutory authorities. Workers were able to confer with one another and pass legislation with the consent and input of the public through these statutory authorities.

Enter the Snowy Mountains Scheme: a hydroelectricity and irrigation complex in south east Australia, sixteen major dams, seven power stations, pumping station and 225 km of tunnels, pipelines and aqueducts. It was largely constructed by European immigrants and is seen by many as “a defining point in Australian history, a symbol of multicultural, resourceful, independent Australia.”

A map of the Snowy Mountain Scheme, not Canberra, top right, and Thredbo, bottom left.

A map of the Snowy Mountain Scheme, note Canberra, top right, and Thredbo, bottom left.

The Scheme generates 67% of all renewable energy in the mainland National Electricity Market and provides approximately 2100 gigalitres per annum to the Murray-Darling Basin, providing additional water for an irrigated agriculture industry worth around $3 billion, representing more than 40% of the gross value of the nations agricultural production

Workers inside tunnels making up part of the Scheme

Workers inside tunnels making up part of the Scheme

The project at the time of it’s implementation was rumoured to be unconstitutional, and eventuated in the deaths of 121 workers. This excerpt from a discussion paper on the Scheme goes into some detail around the political concerns at the time of development and planning:


“Perhaps more daunting than the engineering challenges were the political ones… [then Prime Minister Ben] Chifley saw in the Australian Constitution a simple solution to the bickering that was occurring between the States. Each State wanted the greatest benefit to lie, understandably, within their own borders… There was one ready made solution for the Prime Minister, to invoke the 1909 agreement made between the Commonwealth and NSW, however that would still leave Victoria and South Australia to deal with. However, lurking in the Constitution was a solution, and that was to make the Scheme a national defence issue.

A conversation related by the Governor-General between himself and the Prime Minster summed up the attitude of the day;

McKell – The Snowy is a national work and as Prime Minister I think you should do it as a national work,
Chifley – Yes, but you know I haven’t got the constitutional authority.
McKell – I know you haven’t, but do it. Go ahead and do it. And let’s see what will happen. Don’t forget this Ben, under this Scheme we are going to build generating stations thousands of feet under the earth.
Chifley – What are we going to do that for?
McKell – So the bombs can’t get at them. This is a defence job. This is for the defence of Australia.

Indeed, the Act was introduced into the Federal Parliament under the Commonwealth’s defence power. It was fortunate that the validity of the Act was never challenged, as it would very probably have proved to be unconstitutional. It was not until 1959, ten years later, that the Act was underpinned by appropriate State legislation, with the Snowy Mountains Agreement becoming effective from the 2nd of January 1959. It was during this time of constitutional limbo that the Australian Workers Union secured more favourable working conditions under the threat of a constitutional challenge to the Authorities validity.”


From the same document:

“7. Degree of Public Interest

The possible level of public controversy over the Scheme would be examined under this heading, as well as the possible generation or maintenance of social inequity.”


This is relatively unsurprising except for the obviousness of the language. Statements like these can be found scattered through reports generally only read by rich men whose interests are covered within them.

Tumut 3 Generating Station

Tumut 3 Generating Station

The Scheme, despite being rated by the American Society of Civil Engineers as being a “world class civil-engineering project”, is in the process of being considered for privatisation. In December 2005, the NSW government announced it would sell its 58% share in Snowy Hydro, a publicly unlisted company that operates the Scheme, expecting to yield a billion dollars. This proposal was effectively vetoed by the Federal government in June 2006, by an announcement that the Federal government would no longer sell its 13% stake in the project, which forced the states to follow suit. Interest in privatisation was renewed in Feb 2014, when the National Commission of Audit recommended in its Phase One Report that the Commonwealth sell its interest in Snowy Hydro.

The National Commission of Audit was a commission formed by the Abbott Government on 22 October 2013 as an independent body to review and report on the performance, functions and roles of the Commonwealth government. The Commission has recommended slowing in the increase of the aged pension, an increase in retirement age to 70 by 2035 and the inclusion of the family home in new means testing from 2027. The commission was behind the recommendation of the Medicare copayment, also suggesting cuts to Newstart, NDIS, carers allowances, foreign aid, students, and homeless funding.

In this article over at The Guardian, states that the NCoA’s “few recommendations that affect revenue would pit states against each other with an ultimate aim of further reducing tax revenue in the hope that there will need to be more cuts to services similar to what has happened in the US over the past 30 years.”

These policy recommendations rest on a foundation of abject mythology. Baseline assumptions in the reports include: Australian governments have a lot of debt, that we are a high taxing country, with big spending from government and large deficits. In reality, Australia’s debt levels are historically small, out of 30 OECD countries only six have a lower net debt to GDP, on top of which we are the fourth-lowest-taxed country, paying around 26 percent in tax. We spend around 25% on average of the GDP, and our budget balance, according to this SMH article, is “around the middle to low end of observations elsewhere in the world at 1.8 per cent of GPD.’


SnowyHydro Discovery Centre

SnowyHydro Discovery Centre

So who are Snowy Hydro?

The mission statement at Snowy Hydro reads: “To deliver superior financial returns by being the preferred supplier of risk management products; developing our people, utilising and developing our water resources, physical assets and dual fuel capabilities, and exceeding customer and stakeholder expectations while demonstrating best practice in safety and health, asset and environmental management.”

Noel Cornish on his yacht

Noel Cornish on his yacht

BlueScope Steel’s former Australian and New Zealand steel manufacturing businesses chief executive Noel Cornish is now Interim Chairman of the Board at Snowy Hydro. Cornish is currently on the board of directors for AIG, or the Australian Industry Group, the purpose of which is to represent business interests. It has ties to the mining industry in the form of a partnership with MESCA, the Mining and Energy Services Council of Australia.

Innes Wilcox

Innes Wilcox

Its chief executive Innes Willox penned an opinion piece on the “bogus scourge of job insecurity”, proposing that the situation does not exist and that it is some kind of concerted effort by “misguided” academics, the Greens and labour unions to pursue restrictions on business. It is clear that Willox, and Cornish, subscribe to a neoliberal ideology and that workers rights are, in their minds, considerably less important than the rights of employers.

“Manufacturers in particular are facing considerable headwinds due to the combined impacts of the strong dollar, intense competition from the emerging economies, a legacy low productivity growth, relatively high unit labour costs and considerably higher energy prices. “While there are very exciting opportunities – particularly in the growing markets of Asia – taking advantage of these will require a new phase of investment and innovation,” Mr Cornish said.

In effect this is a stement that rising pay rates for workers and competition from worker run businesses are considerable challenges to the interests Cornish represents. He seems to advocate moving manufacturing to cheaper third world economies in Asia, undercutting the “relatively high unit labour costs” here in Australia. This seems like business speak for moving jobs offshore until Australian workers are prepared to work for third-world pay at third-world conditions.

It seems that the corporation has sought legal indemnity from any “liabilities” incurred by their members:

Consolidated Financial Report for the Reporting Period 30 June 2013 to 28 June 2014, Page 6, Indemnification of Officers and Auditors:

“During the financial year, Snowy Hydro paid a premium in respect of a contract insuring the directors of the Company (as named above), the company secretary and all officers of the Company and of any related body corporate against a liability incurred by a director, secretary or officer to the extent permitted by the Corporations Act 2001(Cwlth). The contract of insurance prohibit disclosure of the nature of the liability and the amount of the premium.”

Even if there was unethical or illegal conduct going on in the upper levels of Snowy Hydro, it seems in my opinion that there would be no way to prosecute those involved, or to legally request details about the offences.

Snowy Hydro was involved in a court case with the Australian Energy Regulator over claims that the company had contravened aspects of the National Electricity Rules. On the 12th of February 2015 the Federal Court of Australia declared that Snowy Hydro had breached clause 4.9.8(a), “A Registered Participant must comply with a dispatch instruction given to it by AEMO unless to do so would, in the Registered Participant’s reasonable opinion, be a hazard to public safety or materially risk damaging equipment.”

The Court declared by consent that the company had breached these rules on nine occasions in 2012-13, by failing to comply with dispatch instruction issued by the AEMO. On each occasion Snowy Hydro generated more power than the dispatch instruction required.

From aer.gov.au:

“The Australian Energy Market Operator issues dispatch instructions to generators, based on offer prices and other market conditions. AMEO’s instructions ensure supply and demand is safely balanced every minute of the day… Compliance with dispatch instructions is essential to maintain power system security. Market outcomes may also be distorted if these instructions are not followed. Where a generator is advantaged by not following dispatch instructions, one or more other players may be financially disadvantaged.”

It seems, in my opinion, that Snowy Hydro have been testing the waters to see how much they can distort the market without attracting suspicion.


A view of the Snowy Mountains from Perisher

A view of the Snowy Mountains from Perisher

What effect could this have on the environment?

The Snowy Scientific Committee is a key body set up through legislation to advise the governments on how to achieve the greatest benefits from the environmental water. The committee’s existence has come under threat from the NSW government, which wants to reform it into an advisory committee funded by Snowy Hydro. According to Environment Victoria, a document published by the NSW government critiques the SSC for being independent from government (which is, in fact, it’s legislated role), for it’s “inflexibility”, and lack of broad expertise. The report also singled out the single source of the committee’s funding and the focus of the committee on environmental issues as being problematic. This is despite the same report admitting on the first page that “projected water recovery entitlements have been achieved, some substantial environmental releases have been made and the Snowy River is showing signs of improved river health.”

The reshuffled committee would boast, instead of it’s current chair who according to Environment Victoria has expert knowledge of aquatic environments, a chair appointed by the NSW Minister for Primary Industry. It seems to me that this is a way to increase industry influence and potentially drown out environmental concerns about development of the region that stem from the public and it’s representatives.

It is clear from the actions of NSW Premier Mike Baird, who has authorised fracking programs that are likely to not only poison the water supplies that feed into major urban areas of NSW, but also permanently contaminate the enormous artesian well underneath the state, that environmental and public safety are not high on the priority list of the current government. There have been reports of children suffering nose-bleeds in towns and suburbs where the fracking has been implemented. Narelle Nothdurft, a farmer hailing from Queensland, in statements to the ABC, said that “I have 11 children and the little children have nose bleeds along with headaches and a metal taste in their mouth all the time and the noise is horrendous.”

It seems unlikely that a NSW government plan for the Snowy River Scheme will result in much more than expanded profits for corporations and further public health and safety risks for the majority of residents.

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One thought on “Snowy Hydro, Neoliberalism and the NSW Government: The Ugly Visage of Privatisation Rears Again

  1. Pingback: Snowy Hydro, Neoliberalism and the NSW Government: The Ugly Visage of Privatisation Rears Again March 19, 2015 – Written by: Rob Marsh | winstonclose

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