Snowy Hydro CEO uses shareholder funds to push privatisation in defiance of shareholder wishes

Snowy CEO should stop using public money to push sell-off

NSW Greens Media Release: 31 July 2008

The CEO of Snowy Hydro has again used his Corporation's resources to push for the sell-off of Australia's largest renewable energy generator, according to Greens NSW MP John Kaye.

Dr Kaye said: "Snowy Hydro CEO Terry Charlton has should either get on with the business of running a publicly-owned entity or he should resign.

"He lost the privatisation debate in 2006 and there has been no shift in community attitudes since then.

"He refuses to accept the judgment of the people of NSW, local residents and even the NSW government who have ruled out privatisation of Snowy Hydro.

"The latest glossy newsletter, circulated to thousands of Snowy Mountains residents, contains a two page 'Company Vision' from Mr Charlton, #PrivatisationPropaganda">arguing that Snowy must be sold off to generate 'extra capital [it needs] to keep up'.

"He tried a similar trick in the March Newsletter when he threatened the people of the Snowy with the spectre of a degrading publicly-owned asset, isolated in a sea of privatised generators.

"His rhetoric did not work then and it will fail again.

"Mr Charlton's behaviour is outside what people expect from the management of a publicly-owned corporation.

"He has a clear conflict of interest. He would be in the box seat to head a privatised Snowy with a good chance of a much bigger pay packet.

"It is time Mr Charlton decided his future with the Snowy. If he can't make a go of it as a publicly owned entity, he should step aside for someone who can.

"He cannot continue using the Corporation's assets to push his pro-privatisation propaganda after his shareholders have told him that a sell-off is not on the table," Dr Kaye said.

The July edition of Snowy Hydro News is available at: www.snowyhydro.com.au/files/SHLNews_July08.pdf (1.5M)

For more information: John Kaye 0407 195 455

#PrivatisationPropaganda" id="PrivatisationPropaganda">Appendix: pro-privatisation propaganda in the Snowy Hydro News of July 2008

In order to demonstrate that the material referred to above by John Kaye were not a careless paragraph or two in the midst of a broader article, we are including it here. The explicit unambiguous pro-privatisation material ocupies one and a half pages of a two page article Company Vision by Terry Charlton CEO & Managing director in a very glossy 12 page magazine.

We may not like privatisation and we may even be ideologically opposed to it in regard to the electricity industry but it has largely already happened across the industry and is not going to be reversed. We may also not like the large energy companies becoming larger and more efficient and we may not like multinational companies owning some Australian businesses but this too has already happened. We may not like the realities of drought, and we might be confronted by the many competing but valid community and economic demands that now limit what can be done quickly for the environment, particularly for our rivers. But there are numerous realities that have to be recognised and accepted. Governments have recognised that they don’t run businesses well and that businesses, such as Snowy Hydro Limited, are best transferred to private sector ownership through either “trade sales” or transformed to publicly listed companies. “Social service” activities such as schools, police, hospitals, basic roads and community infrastructure are, arguably, the province of Governments and rightly so.

To do what is needed for social infrastructure, and if large extra taxes are to be avoided, funds need to be raised by selling those Government “businesses” and operations that are best managed by the private sector. This is what we have seen across the world in the last two decades with unarguable beneficial results. Regrettably, privatisation often comes too late and then the newly privatised businesses and assets are so run down that they can’t perform and they need large capital injection. This necessitates unpopular price increases for the services and products provided. We have seen this in the past in some parts of the world and in Australia. Privatisation then gets a “bad wrap” but it is the earlier lack of capital investment under government ownership that has really caused the problem.

I am very positive that we can achieve our full potential. I am, however, very unhappy about the delayed time frame. The world in which we operate is changing around us and changing fast.

We need extra capital in order to keep up. Our shareholders have indicated they won’t inject extra capital and we can’t expect them to forego dividends forever. The only option is privatisation and I accept this is a shareholder matter.

There is an undeniable truth that given the constraints we confront, we have no better way forward if the vision for the Snowy Scheme, the Snowy Hydro Company and our people is to be fulfilled.

Solutions that promise return to single Government ownership are no solution at all, unless new capital injection is provided, up front along with further capital when the business case justifies it.

Greater borrowings are not prudently possible. Reverting the business to a “water authority” would not sustain existing local employment, nor career growth, nor enable the electricity business to continue to subsidise the water operations and hydrological asset maintenance requirements. Our options are limited indeed… if the vision is to be fulfilled!

I am also often asked about what the local communities can now do to assist Snowy Hydro in securing a long term successful future?

Our response is that we ask for your understanding and support. We want to know that there is a positive community environment and some affirmation that we are doing a good job for all stakeholders. We are in a difficult business at a difficult time. We are doing well against the competitive odds and we are offering a very good working environment. We are supporting our communities. Gone are the days of job insecurity and industrial accidents.

Should options for Snowy Hydro Limited’s future be discussed, and if an option of some form of privatisation of the company, separated from the “icon” dam and tunnel assets, be suggested, if it is not by then too late, we ask that it be positively considered by our communities. Such consideration will include an awareness of the changed and changing realities of our industry and the benefits privatisation of the Company can provide to Snowy Hydro and all its stakeholders.