ETU Media Releases

ETU Media Releases

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ETU warns about tax avoidance, service cuts, job reductions, and price rises

- Friday, May 15, 2015

The parliamentary inquiry into the planned sale of the state’s publicly owned electricity network assets will be given a stark warning today, when unions outline the job cuts, safety problems, price rises and massive tax avoidance that has occurred following interstate privatisations.

In a written submission produced ahead of today’s hearing, the Electrical Trades Union highlighted the history of tax minimisation carried out by the foreign owners of the Victorian and South Australian poles and wires, including one company that had an effective tax rate of zero per cent between 2004 and 2013.

Of the three organisations that dominate the privatised electricity networks, one is owned by Asia’s richest man, Li Ka-Shing, while the others are owned by the Chinese and Singaporean governments.

The ETU singled out Spark Infrastructure, which was recently listed as one of the most significant tax avoiders in Australia. Between 2004 and 2013, Spark made an average annual profit of $101.9 million between, yet had an average annual tax rate of zero per cent.

ETU secretary Steve Butler said the Australia Tax Office was currently pursuing Spark for $700 million, Mr Ka-Shing is currently shifting his business empire to the Cayman Islands, and Victorian network owners Jemena, APA and DUET have also been exposed as avoiding tax.

“Every member of the NSW Parliament should take a close look at the experiences of Victoria and South Australia, understanding exactly what the impacts will be if our state continues down the path of privatising essential services such as electricity,” Mr Butler said.

“Those states have suffered a loss of recurrent income, consumers pay higher prices, there is more load shedding on the hottest days of the year and thousands of jobs have been cut.

“The failures of regulators, and the lack of accountability for profit-driven private owners, ultimately led to the loss of more than 100 lives when inadequate maintenance on the private electricity network sparked several of the deadly Victorian Black Saturday bushfires.”

Mr Butler said the union, which represents 20,000 electricians and power industry workers across New South Wales and the Australian Capital Territory, had been consistent in its efforts to stand up for the people of NSW, having campaigned for two decades against the sales of electricity network assets, power retailers, and electricity generators.

“During the past 15 years, the publicly owned electricity network has contributed more than $15.5 billion to NSW Treasury, an average of more than $1 billion a year,” he said.

“We believe the people of NSW are best served by retaining public ownership of the network businesses, while realising economic gains for consumers through ongoing reforms including the possible merging of existing distribution network businesses from three to two, creating a single metropolitan network and a regional network.”

The union also raised concerns that the proposed transaction would see a majority stake in Ausgrid and Endeavour Energy, along with 100 per cent of TransGrid, being transferred to private owners, most likely based offshore.

“We are urging the parliament to consider alternatives that ensure the NSW Government retains control of this essential service, such as a reduction in the shares to be offered in Ausgrid, Endeavour Energy and TransGrid down to 49 per cent,” Mr Butler said.

“We are also concerned about the likely impact on employment, particularly in rural and regional areas where around 40 per cent of the workforce is currently based.

“In Victoria, private owners aggressively cut costs to recoup their investment in the shortest possible time, reducing capital expenditure and maintenance programs, eliminating apprentice opportunities, closing depots, and contracting out core work.

“Based on that experience, we predict the number of electricity workers employed by NSW network businesses could be cut by more than 50 per cent over the coming years if the NSW Upper House vote to support Mike Baird's privatisation plan.

“This will have severe flow on effects for electricity consumers in the areas of reliability, safety, emergency response and customer service standards.

“If this sale proceeds, it is essential that a strong employment protection package is included as part of legislation that applies to all employees and includes a provision for no forced redundancies.”

Click here to view a copy of the ETU’s written submission to the Select Committee on the Leasing of Electricity Infrastructure.