A potential conflict of interest at the ACCC?
COMMENTARY
January 8, 2014
ACCC Chairman recommends that Australia sell off its government owned assets – including energy
The Australian Competition and Consumer Commission (ACCC) is an independent Commonwealth statutory authority whose role is to enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians. The ACCC is closely allied with the Australian Energy Regulator (AER), Australia”™s national energy market regulator with the AER’s staff, resources and facilities are provided by the ACCC.
Besides recommending the privatization of Australia Post, Rod Sims, chairman of the ACCC is also pushing for the sell-off of all state-owned energy companies (Australian Financial Review).
As for the justification of a wide ranging government sale of assets Sims claims it “ensures productivity and the greatest benefit”. (The Sydney Morning Herald)
Greatest benefit to whom I wonder?
A massive sell-off recommended
In the Tasmanian Mercury newspaper it was reported on January 7th that Sims stated “a root-and-branch review of competition laws should recommend the Government [that would include state governments] relinquish control of long-held assets to maximise productivity and create the greatest benefit to consumers”.
Relinquish control over to whom and is it really just to give the greatest benefit to consumers?
The implications for Tasmania, which still owns its energy assets, are all too obvious. Will the Abbot government therefore be urging cash-strapped Tasmania to balance its budget by selling off its stake in Aurora, Hydro Tasmania and Transend as Sims recommends? If so, who would buy these assets?
If we consider the situation in Victoria, a prime candidate is the Chinese government-owned State Grid Corporation of China which recently completed its purchase of a 19.9 % interest in Australian-listed SP AusNet and a 60 % stake in the privately held Jemena business. This was approved by the Abbott Government (The Australian). If we look at a breakdown of foreign ownership of Victoria”™s power distribution companies we find the following:
Both CitiPower and Powercor are 51% owned by Hong Kong based Cheung Kong group of companies; Jemena is 60% owned by State Grid Corporation of China and 40 % owned by Singapore Power and SP AusNet is 31.1% owned by Singapore Power and 19.9% owned by State Grid Corporation of China.
Interestingly the Australian Taxation Office is taking on the Cheung Kong group for some $776 million in unpaid tax and penalties in one of the biggest fights the ATO has ever launched. (The Australian)
Is it really smart to be allowing a foreign tax evader to buy into Australia’s energy infrastructure?
Why is Mr Sims so keen on Australia selling off all its energy assets? On January 6 on the ABC News Sims claimed that state governments should privatize energy companies because it would bring down electricity prices.
However, his advice to the government appear to have historical roots in his previous position as a founding Director and the Chairman of InfraCo Asia Development (IAD), an investment company which “operates in low-income developing countries of South and Southeast Asia” and which “seeks to create viable infrastructure investment opportunities that balance the interests of host governments, the national and international private sector and providers of finance”. See: InfraCO Ltd.
Crudely put, this company makes its profits by arranging deals that involve the disposal of 3rd world national assets to private corporations who will then reap the rewards of their investments.
Could this be considered a potential conflict of interest when Sims, in his current position as chairman of the ACCC, now advises the Australian government to sell off all its long-held assets?
Who is really benefiting here?
Don Maisch
Leave a reply →