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Mobilise Now to oppose Snowy Sale

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  • Tristan
    Mobilise Now to oppose Snowy Sale The Snowy Mountain Hydro scheme sale, being promoted now by the NSW and Victorian Labor governments as well as the Federal
    Message 1 of 1 , Jun 1, 2006
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      Mobilise Now to oppose Snowy Sale

      The Snowy Mountain Hydro scheme sale, being promoted now by the NSW
      and Victorian Labor governments as well as the Federal conservative
      government, is expected to raise $3 billion. The State Government
      in Victoria is particularly eager to promote the fact that proceeds
      will go towards desperately needed infrastructure for public
      schools, while Federally, the conservatives will be using their
      proceeds to pay for superannuation liabilities of public servants.

      Many, however, including former Liberal Prime Minister, Malcolm
      Fraser, are not convinced of the virtue of the sale. To begin
      with, the scheme itself, after corporatisation, is a valuable asset
      providing substantial revenue flow to the governments concerned.
      Reaping approximately $150 billion a year in profits under public
      ownership, surely the long term financial costs of the sale outweigh
      the short term benefits. Also, as Craig Ingram noted in a Radio
      National interview on February 19th 2006, privatization could well
      lead to the running down of the scheme, with private shareholders
      reluctant to risk share value by investing in badly needed

      As Kenneth Davidson writes in `The Age' today, the Victorian Labor
      government ought not be playing `follow the leader' in pursuing the
      Snowy privatization. For Davidson, the sale represents an
      opportunity for Victoria to "increase its share of the Snowy Hydro
      at a discount" as a consequence of a depressed sale price derived
      from the private ownership cap of 10% per major individual
      shareholder. http://www.theage.com.au/news/kenneth-davidson/dont-

      As Davidson notes,

      "If Victoria borrowed $42 billion to finance buying the federal and
      NSW shares of Snowy Hydro, it would increase state debt by about 1
      percentage point, without affecting Victoria's triple-A credit

      Davidson also notes that the privatized entity may seek to reduce
      environmental flows aimed at restoring the Snowy River to its former
      grandeur in order to maximize power production. Meanwhile, the
      value of the asset is bound to rise in future years as the demand
      for clean energy grows exponentially.

      Whichever way you look at it, the case against the Snowy sale is
      very strong. While expenditure on infrastructure is welcome, the
      Victorian and NSW State governments are well placed to borrow for
      infrastructure at the low rate of 5.5% without resorting to an asset
      sale that, in the future, will cost hundreds of millions. For the
      Coalition, commitment to privatization is an ideological fancy of
      fanatical proportions. Prime Minister, John Howard, has admitted
      that most Australians are opposed to the sale but as was the case
      for the raft of privatizations under former Labor federal
      governments, this has been of little concern.

      For Labor, too, it seems there is now a neo-liberal ideological
      commitment to privatization in addition to an aversion to debt-
      financing – even when State Governments are in strong financial
      positions and can afford to borrow and service debt without
      affecting their credit ratings.

      It's time now for members of the Labor Party, The Greens and of the
      broader community to mobilize against this fire sale of one of the
      nation's most precious assets, and to keep water and electricity
      supplies in public hands.

      Send your letters of protest to:

      Steve Bracks, Premier of Victoria: premier@...
      Morris Iemma, Premier of NSW: lakemba@...
      Or email the Prime Minister, John Howard at the following URL:

      Alternatively, if you an ALP member move the following motion in
      your branch:

      "We resolutely oppose the sale of the Snowy Mountains Hydro Scheme
      and call upon State Labor governments to retain their majority
      shareholding. While water should be in the hands of all Australians
      rather than owned and distributed privately for profit, we are also
      concerned that the privatization of the scheme will cost the
      governments in question dearly in the future as the asset
      appreciates in value with growing demand for clean energy. Whether
      or not sufficient attention will be paid to the maintenance of the
      scheme with the introduction of financial pressures to maximize
      share value is also of great concern. The privatization process
      might also be opposed given that the `one-off' windfall of
      approximately $3 billion is not enough to make up for the loss of
      about $150 million in public annual revenue. Furthermore, we are
      concerned that privatization will lead to pressures to reduce the
      flow of the Snowy River with severe ramifications for its future
      environmental viability. Should the NSW government proceed with
      the sale, we call upon the Victorian State Labor government to halt
      its commitment to privatizing its share and instead boost its stake
      in the scheme by purchasing both the NSW and Federal stakes in the
      scheme. Finally, we reject any suggestion that it is necessary to
      pay for infrastructure through the privatization of key public
      assets and call upon all Labor MPs, now, to voice their opposition
      to the sale. Should the sale proceed as currently planned, we call
      upon the next ALP National Conference to adopt policy to re-
      socialise the scheme upon attaining government"

      Tristan Ewins
      June, 2006
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