Queensland’s Public Assets; Power and Water under attack.

1. Queensland’s
Public Assets;
Power and Water
under attack.
Briefing Paper to MPs
There have been many statements made about Privatisation by Members of the
Queensland Parliament, stating they will not sell assets without a mandate from the people
of Queensland, however it is becoming increasingly obvious that these “promises” are in
contradiction to activities in these industries. Since 2012 we have seen massive job cuts
across the Queensland public sector and GOC’s including Stanwell, Ergon, Energex and
Powerlink in the power sector and now SunWater in the irrigation and water supply sector.
We require understanding as to how the Queensland Government can say one thing and
then allow crucial job cuts to frontline jobs affecting the delivery of our public assets. This
briefing paper also questions the Government’s financial calculations which form the basis
of its dishonest “Strong Choices PR campaign”, regarding the benefits of privatisation, and
concludes, apart from the rubbery contestable figures re: debt they also fail to factor in lost
revenue once essential profitable assets are sold.
May 2014

2. 2 | A s s e t s u n d e r t h r e a t
Background
 More than 1660 jobs have been cut across the state owned Electricity sector since March 2012;
 Electricity prices increased by 22.6% in July 2013;
 Government contradiction in statements on assets sales; they will not sell assets without a
mandate, stating that they will likely seek a mandate to sell Generators Stanwell and CS Energy
and sections of SunWater at the next poll in 2015, while they will not seek a mandate to sell
Energex, Ergon or Powerlink until a later date;
 Costello Audit – pressure to fully privatise most Government services including Power and Water;
 IRP – sets out proposals 29 to outsource Ergon remote generation assets and shed jobs and
proposal 23 to close smaller regional Ergon depots with between 8 and 15 staff and replace them
with service agents.
 In December 2013 the State Government announced its intention to seek a mandate to sell some
assets including some ports, roads, Water infrastructure and CS and Stanwell Electricity
generators. In the Statement by Treasurer Nicholls on 13th
December he also indicated the
Government would be initiating Private Equity deals in Ergon, Energex and Powerlink to the value
of $15 billion WITHOUT a Mandate.
 In February 2014 two important reports have been released into two significant issues associated
with privatisation – historical analysis – Professor John Quiggin’s report into 20 years of
privatisation’s failures shows how selling assets is not only socially destructive but they actually
fail economically as well, while a Report presented by Orion Consulting showed how the State
Government could, if it, desired save each and every Queensland household up to $310 per year
off their power bills by “ring fencing” dividends and profits from the Electricity industry and
ploughing them back into the industry and its customers, importantly it would mean that the
Solar Feed in Tariff, the Service Obligations to remote customers could both be paid in full and
there would still be money left over to benefit customers, without selling any assets or reducing
maintenance.
http://www.etu.org.au/document/prof-john-quiggin-report
http://www.etu.org.au/document/orion-report-queenslands-power-industry

3. 3 | A s s e t s u n d e r t h r e a t
 In March 2014 Treasurer Tim Nicholls announced he would be seeking public input into the
budget launching the $6 million so-called Strong Choices campaign of community forums and
saturation MSM and social media advertising complete with a flawed interactive website. The
community forums have been an abject failure with many community members being excluded
only to find out the rooms are half empty. However the PR campaign is attempting to frame the
debate as a choice between the “palatable Asset sales” or the taboos of “raising taxes and cutting
services” we believe this is a dishonest campaign based on lies and misinformation. The Strong
Choices website has been roundly criticised as a biased attempt to sway voters, with the
Treasurer himself describing it as a “Game”
Privatising assets does not improve the bottom line (Paraphrased from John Quiggin’s report)
“Total borrowings and other gross debt measures are economically nonsensical because they disregard
assets. On the relevant measures of a State’s financial position, namely net worth and measures of net
financial debt, Queensland remains in a strong position, and is projected to improve further over the period
of the forward estimates.” Professor John Quiggin,
The LNP deliberately overstates Queensland’s debt position to create an impression of a budget
emergency by quoting gross debt levels of between $100 billion and $120 billion.
Gross debt measures are economically nonsensical because they disregard assets. On the relevant
measures of a State’s financial position, namely net worth and net financial debt, Queensland remains in a
strong position.
The relevant measure here is net financial debt, the difference between financial assets, including
investments in Government owned corporations, and liabilities. According to the 2013-14 Budget Papers
(Chart 5.1) Queensland has net financial debt of $25 billion held against non-financial assets
(infrastructure and so on) valued at $190 billion.
Financial Impact of Asset Sales.
The LNP claims that it is necessary to reduce gross public debt by $25-30 billion and offers three ways to do
so: raising taxes, cutting spending or selling assets. The more we do of one, the less we have to do of the
others.
If we do what the Government wants and agree to all the proposed asset sales, the estimated proceeds are
$34 billion. The reward is a $1.7 billion saving in interest, which we are then invited to spend on desirable
things. (Strong Choices interactive website)
There’s just one problem. The calculation has omitted the fact that, if we don’t own public enterprises any
more, we forgo their earnings.

4. 4 | A s s e t s u n d e r t h r e a t
The 2013-14 Budget Paper 2 has a section devoted to public non-financial corporations. The total Earnings
Before Interest and Tax of these enterprises was $3.7 billion. Of this sum, $1.2 billion was paid to the state
in dividends, about $500 million in tax-equivalent payments.
How much will the public lose from Privatisation?
So, if we sold everything, we would forgo $3.7 billion in income, far more than the $1.7 billion net gain as
the Government suggests.
Current State of Play
Generation
 In December 2012 two generating units were shut down at Tarong power station causing close to
200 jobs to be lost (at Tarong and the Meandu mine) and also creating a situation where 700MW of
Electricity was removed from Queensland’s Electricity market;
 A review initiated in Stanwell Corporation as a result of the State Government push to “drive down
costs” close to 200 more jobs have been lost across the Stanwell sites including the axing of the
annual Apprentice intake;
 Towns of Kingaroy, Nanango, Yarraman and other areas of South Burnett affected as well as areas
around the Rockhampton region;
 150 people turned out to a ‘Save our Town’ rally in Nanango, clearly a lot of community anger;
 A review is about to commence in CS Energy, with fears of further job cuts.
 In February this year Stanwell Corp announced it would be mothballing Swanbank E gas-fired power
station and 33 workers would lose their jobs come 1st
October this year because the company could
produce gas for the market at $4 Gigajoule and sell it for $12 Gigajoule. Stanwell also announced it
would re-commission the mothballed Tarong Units, however there would not be any increase in
staffing levels at Tarong.
Result
First time ever Queensland has imported power from interstate. No cost savings, in terms of cheaper
power bills, to the consumer. In fact the only people to benefit from this are the small privately run
peaking stations in Queensland who are starting to make record profits.
Electrical Supply Industry; Ergon, Energex and Powerlink
The electrical supply industry has been heavily affected by the State Government imposing minimum 10%
cuts across the board, we have seen job cuts in excess of 1000 across Energex and Ergon and around 100 in
Powerlink many of them frontline positions. There have been significant cuts to vegetation management
programs and maintenance, as well as capital expenditure. While the Government continually says it is not

5. 5 | A s s e t s u n d e r t h r e a t
selling the assets (Energex, Ergon and Powerlink) we are seeing outsourcing of jobs and privatising services
as is evidenced by the following examples.
Recommendations from the “Independent” Review Panel (IRP)
When representatives attended meetings of the IRP they were told that Privatisation was not in the scope
of the Review, which was backed up by the publicly available scope set for the IRP. We note however, that
the IRP handed down findings regarding the possible privatisation of Electricity Assets.
The following IRP recommendations are currently being actively pursued, in line with Government policy
and consistent with the Treasurer letter to the Government Owned Corporations’ (GOC) Boards to cut
10%/year for the next three years.
Recommendation 23 is specifically about closing/outsourcing Ergon depots under 15 staff which includes
more than 40 depots across Queensland, many of which are in regional and remote areas.
Ergon representatives have visited many depots encouraging staff to take up the service agent option
where individuals essentially buy the right to seek contracts, a system that has failed in Victoria where
some staff unfortunately took the bait, they won contracts that provided very little field work, jobs were
therefore cut and when the three year contracts expired they were swamped by the large contractors.
Whole areas of regional Victoria were decimated.
This is Privatisation by stealth without a mandate.
Ergon Energy profits this financial year increased by 35% to $434 million, this raises the question as to why
Government would want to privatise an asset that provides an essential service, creates regional
employment and generates large financial deposits into State revenue. The combined profit of all Power
GOC’s were around $1B.
Private companies are focussed on profit instead of first and foremost providing an essential service.
We are more than willing to sit down with Government to discuss options to minimise the pressure on
Electricity price increases but it shouldn’t be at the expense of services and response times to our
communities and customers particularly customers in regional Queensland that already suffer as a result of
the remoteness of this State.
Recommendation 29, outsource/privatise 33 remote power stations which is accepted in principle and
implementation is with Ergon, they have just finished a restructure on the basis of a 20% reduction in
capital expenditure and operational expenditure but cut frontline staff by 30% and they proposed further
cuts to four power station attendants in communities such as Boulia, Cammoweal, Burketown and
Bamaga. Ergon is in discussions with Lend Lease to take this contract.
Recommendations 17 & 19 – Implemented resulting in the sale of Ergon’s ROAMES asset and Forest
Assets for approximately $40-60 million– without a mandate.
Powerlink
Powerlink have lost 100 jobs and are now the subject of a scoping study by Rothschild Merchant Bank in a
veiled attempt by the Government to prosecute the argument for sale.
Water infrastructure and supply

6. 6 | A s s e t s u n d e r t h r e a t
SunWater
SunWater - a profitable GOC was earmarked for sale in the Costello Commission of Audit and the recent
announcement that Macquarie Group will undertake a scoping study into how the Government can divest
its interests and show the Government is serious about selling off this vital infrastructure. The Government
has indicated it will keep control of the dams, however the water infrastructure such as pipelines and town
drinking water are in the sights for privatisation.
There have also been announcements from the CEO that up to 20% of the workforce or around 110 jobs
will be cut including the closure of regional offices like Toowoomba and Clare. Some examples of what is
at stake;
1. Blackwater Pipeline - Provides water for Blackwater Town Water Supply, Stock and Domestic farm
Offtakes and several Coal Mines;
2. Collinsville Pipeline - Provides water for Collinsville Town Water Supply, Stock and Domestic farm
Offtakes and several coal mines. Newlands Pipeline from same Pump Station provides water for
Glenden Town Water Supply, Stock and Domestic Offtakes and Newlands Coal Mine;
3. Eungella Pipeline - Provides water for Eungella Campground Water Supply. Provides part of the
Moranbah Town Water Supply, Stock and Domestic Offtakes and Hail Creek Coal Mine;
4. Burdekin Moranbah Pipeline - Provides part of the Moranbah Town Water Supply, Stock and
Domestic Offtakes and several Coal Mines;
5. BMA Operate and Maintain Contract - Provides part of the Moranbah Town Water Supply. Town
Water Supply to Middlemount, Dysart, Coppabella. Stock and Domestic Offtakes and several Coal
Mines.
Not4Sale
In just over 16 months we have achieved some good outcomes including;
 7500 likes on our Facebook page, we have good interaction on Twitter and have just started up
with the photo app Instagram;
 We have thousands of registrations on our Webpage;
 We have people sending letters to their MP and the editor of their local newspaper;
 We have worked with Tony Barry and the NSW expert on the impact of privatisation Sharon Beder;
 There are now active Not4Sale supporters in every State electorate, including 26 N4S Community
Committees;
 We continue to build on our relationship in the Cape, along with continual visits, radio interviews
and sharing of information on the perils of selling our assets with Mayors and community leaders;

7. 7 | A s s e t s u n d e r t h r e a t
 Community campaigning on the ground in local communities that are already being affected by
massive job cuts, like Nanango;
 Participation in local activities, Ag Shows, markets, NAIDOC celebrations and local events across the
State.
 We played an instrumental role in highlighting the issues around privatisation during the Redcliffe
By-Election, we ran a strong “want to save your power assets…put the LNP last Not4Sale”
campaign. Exit polling conducted after the record 17.1% swing showed opposition to Privatisation
was one of the key issues in the LNP’s poor showing. A subsequent poll run in blue ribbon Clayfield
showed a 14% swing against the Treasurer on the back of significant opposition to Privatisation.
Job Cuts and Regional Pain
Snapshot
 Ergon have axed more than 600 staff, many frontline jobs have been axed including live line
workers in Tully and other areas, increasing the prospect of workers being unable to respond to
outages and storm damage in a timely manner; as was recently witnessed during the aftermath of
TC Ita earlier this month.
 Energex have axed in excess of 630 jobs and have cut Apprentice numbers from 280 Apprentices to
220;
 Powerlink have lost 100 jobs and are now the subject of a scoping study by Rothschild Merchant
Bank;
 Stanwell as indicated above, have shed more than 400 jobs with CS Energy expected to follow suit;
 Proposals 23 and 29 of the IRP report will see a further 300-400 jobs cut across Ergon including
many Indigenous workers in remote areas.
Wider Industry Issues
 Qld Government Electricity Strategy Discussion Paper
It is critical that any blueprint for the future of Queensland's energy industry is based on the correct
principles. Jobs, network safety and public ownership of assets will be key to see the energy
industry developing over the next three decades for the benefit of all Queenslanders, not just
private interests.
 Proposal to Remove Subsidies from Remote Areas
Will have a massive impact on already disadvantaged communities, coupled with the outsourcing of
remote generation units and the closure of small remote depots will likely mean huge disparity in
access, cost and reliability of supply.

8. 8 | A s s e t s u n d e r t h r e a t
 State-Wide Network Fire Reporting Framework
A call for the establishment of an open and transparent State-wide reporting framework for any
fires that occur on transmission or distribution networks in Queensland. A similar framework
already exists in Victoria where it was implemented following the Bushfire Royal Commission. It is
our view that this framework will be particularly important for regional communities.
Conclusion
 Queensland’s public Electricity and Water assets are under threat of being privatised by stealth by
outsourcing work and reducing the workforce;
 We are building a wide coalition of supporters from within communities to stand up and fight back;
 We will be holding the Government to account, as we did with the Bligh Government and any other
Government that thinks that selling the peoples’ Assets is good Government Policy.
 We reject the flawed economic thinking behind privatisation and conclude, based on facts and
historical examples that privatising Queensland’s essential Electricity and Water assets is a bad
policy that fails both socially and economically.
The Not4Sale campaign along with the ETU and State MP for Bundamba Jo Ann Miller have launched a
petition calling for a binding Referendum on Asset Sales because we believe Queenslanders deserve a real
say on the important issue. Further we believe the current $6 million "Strong Choices" campaign breaches
section four of the Liberal National Party Government's own advertising code of conduct, which says
advertising must be "free of political argument".
The Not4Sale Ltd team is currently out talking to Queensland MLA’s about our fears, the reality of what is
occurring now and what we believe the future holds, given the current direction. If you would like our
team to brief you in person, please contact me to arrange.
Regards
Lara Watson
Not 4 Sale Ltd
General Manager