Image for Conflict of interest in the ACCC and its possible affect on Tasmania

The Australian Competition and Consumer Commission (ACCC) is the independent Commonwealth statutory authority whose role is to enforce the Competition and Consumer Act of 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.1

Besides recently recommending the privatization of Australia Post, Rod Sims, chairman of the ACCC has recommended the sell-off of all state-owned energy companies.2 As for the justification of a wide ranging government sale of assets Sims claimed it “ensures productivity and the greatest benefit”.3

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”.4

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 the ACCC 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. Thesell-off was approved by the Abbott Government.5 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.6

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.7   This fact begs the question: Is it really in Australia’s interest 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.8

However, his advice to the government may have historical roots going back to his previous position as a founding Director and the Chairman of InfraCO Asia Development (IAD)9 an investment company 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”.10

Crudely put, this company makes its profits by arranging deals that involve the disposal of 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?

If Sims has his way the result could see Tasmania’s energy assets ending up in foreign hands. Who is really benefiting here and will the next Tasmanian government fall for this ploy?

Don Maisch who has written previously to the Tasmanian Times, has been directly involved in telecommunications standard setting since the early 1990s, initially with the Australian Democrats and later as a member of a Standards Australia Committee, setting human exposure standards for telecommunications. In 2010 he received his PhD from the University of Wollongong with his of area of research examining industry influence in a number of expert committees charged with setting telecommunications exposure standards. He has since authored several papers examining this issue both nationally and internationally. He maintains an extensive website:  http://www.emfacts.com/papers/ and blog: http://www.emfacts.com/

Refs

1 About the ACCC, http://www.accc.gov.au/about-us/australian-competition-consumer-commission/about-the-accc#our-purpose

2 Patrick Durkin, “ACCC calls for big asset sell-off”, Financial Review, Jan. 6, 2014, http://www.afr.com/p/national/accc_calls_for_big_asset_sell_off_atB9OiIob2lTqkts6kqIWN

3 AAP, “ACCC urges government to sell off assets”, The Sydney Morning Herald, Jan. 6, 2014, http://www.smh.com.au/federal-politics/political-news/accc-urges-government-to-sell-off-assets-20140106-30cea.html

4 AAP, “Aussie Post sale fear”, The Mercury, Jan. 7, 2014. P. 7

5 Paul Garvey, Chinese firm acquires SP AusNet’s stake, The Australian, Jan 4, 2014, http://www.theaustralian.com.au/business/mining-energy/chinese-firm-acquires-sp-ausnets-stake/story-e6frg9df-1226794608150#

6 SSMA, The Chinese Government is now a major player in Victoria’s electricity distribution business, Jan. 6, 2014, http://stopsmartmeters.com.au/2014/01/06/the-chinese-government-is-now-the-major-player-in-victorias-electricity-distribution-businesses/

7 Susanna Moran, “ATO in brawl with Asian billionaire Li Ka-shing”, The Australian, Oct. 3, 2013, http://www.theaustralian.com.au/business/ato-in-brawl-with-asian-billionaire-li-ka-shing/story-e6frg8zx-1226731907836#

8 Michael Janda and Justine Parker, “ACCC chairman Sims argues the benefits of privatisation”, ABC News, http://www.abc.net.au/news/2014-01-06/accc-chairman-sims-floats-privatisation-of-power-post/5185970
9 http://en.wikipedia.org/wiki/Rod_Sims

10 InfraCo Asia, http://www.infracoasia.com/about.asp