Sell-off risky for NSW taxpayer

Emissions from NSW coal-fired power generators are not only adding to global warming. The Auditor-General has now confirmed what most financial analysts have been saying for months: these emissions will seriously affect the price the Treasurer gets for the power sale.

And until the Federal Government sorts out its emissions trading scheme, which will put a price on those greenhouse gases, privatising the state generators may be risky for NSW taxpayers.

Indeed, the Auditor-General's report reveals the confidential Treasury strategy document on the privatisation has already recommended to the Iemma Government "delaying the sale of any generator until emissions trading scheme details are known".

The Premier, Morris Iemma, tried to spin the Auditor-General's report yesterday as a green light for the sale. That is a simplification. While the report does not suggest delaying the legislation, it highlights huge gaps in the Government's facts and figures on the privatisation, partly because of the unknown cost of greenhouse gas pollution. No one, it seems, can put a price on the pollution from the generators or say how much they are likely to be compensated. And that means investors will be nervous about leasing the coal-fired power generators.

The most stunning revelation in the Auditor-General's report is that state Treasury has not even produced figures on whether it is less costly and less risky for the Government to keep its electricity business rather than sell it.

Without those basic figures, the report says, Treasury has so far been unable to come up with a reserve price for any of the electricity assets it wants to privatise. In other words, it does not know how low it should go when selling Energy Australia, or leasing the heavily polluting Macquarie Generation, which supplies 13 per cent of the national grid.

The Auditor-General suggests it would be useful to find out these details, and what to do if the Government doesn't get the reserve price it wants. But given the uncertainly around the price of greenhouse gas pollution, it may be difficult for Treasury to put a reserve price on some of the most polluting power generators in the developed world.

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