WA Government to sell 51 per cent of Western Power, hopes to raise $11 billion
30th Nov 2016
The West Australian Government has confirmed it will sell 51 per cent of Western Power if re-elected for a third term in office, as it pledges electricity prices will not rise as a result of the sale.
- 51 per cent of Western Power to be sold
- $11 billion expected sale price to retire debt, fund infrastructure
- Purchasers expected to be superannuation funds
Premier Colin Barnett will lead his team to the state election next March arguing for a partial sale of the power utility, with the government retaining 49 per cent.
The Government expects to raise $11 billion from the sale, and plans to use those funds to bankroll ongoing capital works and infrastructure projects.
Mr Barnett said the sale would reduce government debt by $8 billion.
However he said the regulatory regime controlling prices would not change, and pledged power prices would not increase as a result of the proposed sale.
“This will not affect the price of electricity to households,” he said.
He has also given guarantee that there will be no loss of jobs.
“There are measures that will be put in place to ensure there are no forced redundancies, no loss of employment through Western Power,” Mr Barnett said.
Sale to fund schools and transport as well as repay debt
Mr Barnett said the remaining $3 billion not used to pay off debt would be placed in a “next generation fund” to be used on vital infrastructure in education and transport over the next five to six years.
Around $1 billion would be allocated to schools and TAFE, with a further $1 billion allocated to transport, including public transport and road projects.
The Government has also committed $150 million to improving the reliability of power supplies at the so-called “edge of grid” areas in regional and rural WA.
Mr Barnett expects the purchasers of the utility, which owns the poles and wires for distributing across the state, will be superannuation funds and will remain in Australian hands.
Treasurer Mike Nahan said the utility would continue to pay dividends of between $100 million and $150 million a year.
“It is, in my view, a game changer,” he said.
“It puts us on a pathway to regaining a AAA credit rating.”
Hesitant Nationals ultimately back sale
The policy has the endorsement of the Liberal and National parties, which have spent weeks reaching an agreement on the sale.
Relations between the two government alliance partners were severely strained when the Nationals refused to support the Government’s planned sale of Fremantle Port.
Nationals Leader Brendon Grylls said with a commitment to improve services at the edge of the network, and investment of substantial proceeds from the sale in new infrastructure, his party could support a partial privatisation.
“This decision allows us to continue to invest in the infrastructure of growth for the future,” he said.
“We’re satisfied that edge of grid areas can be protected.
“We have the endorsement of our party.”
The Nationals had insisted proceeds be used to fund public infrastructure projects, creating jobs at a time when mining construction has flattened and unemployment has reached 6.5 per cent.
“We think $11 billion is about right, that’s as good as we can do at this point,” Mr Grylls said.
‘Labor won’t sell Western Power’
State Opposition Leader Mark McGowan has reiterated Labor’s position that it would not sell Western Power if it won next year’s election.
The Labor leader is also deeply sceptical about the Government’s projected sale price.
“Back in May they said the entirety of Western Power was worth $12 billion. Now, in November-December, they’re saying half of it is worth $11 billion,” he said.
“They are lying directly to the people of Western Australia to try to skate through and sweet talk their plan to sell Western Power.”
Wayne Wood from the Australian Services Union remains opposed to the sale of Western Power, even if it is limited to 51 per cent.
“Whether it’s partial or whether it’s full, it’s leading to full privatisation we have no doubt about that,” he said.
Mr Wood said the unions would be doorknocking, phone polling and conducting public meetings to warn the public of the risks of privatisation.
He dismissed the Premier’s assurance there would be no job losses.
“There’s redundancies now. We’ve had some 800 redundancies in the last three years. They’ve been trimming this organisation up. Lots of people have already lost their jobs,” Mr Wood said.