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| Madam Speaker, I move that the bill be now read a second time. This is one of three bills that this second reading speech will come - I will give notice of the other two straight after this, and I trust they will all be debated individually to keep the opposition happy. These bills are being introduced to effect the structural separation of the Power and Water Corporation and establish three separate government-owned corporations involved in producing, transporting and selling electricity in the Northern Territory. The Power Generation Corporation will be established by the Power Generation Corporation Bill, and will be responsible for the broader electricity generation functions which are currently undertaken by the Power and Water Corporation. Given the functions conferred on it by virtue of clause 9 of the bill, this means that the new corporation will be responsible for operating all of the generation assets in the Darwin/Katherine interconnected system and in regional centres. The new Power Generation Corporation will sell the electricity that it generates to the Power Retail Corporation and to third parties, private sectors operators who are licensed to sell electricity in the Northern Territory. The Power Generation Corporation will not be responsible for the generation of electricity in Indigenous communities. The generation of electricity in these communities will continue to be undertaken by Indigenous Essential Services Pty Ltd, a not-for-profit subsidiary of the Power and Water Corporation. The new Power Retail Corporation will purchase electricity initially from the Power Generation Corporation but, in the longer term, it will also have the opportunity to buy electricity from private sector generators that are established in the Territory market. The Power Retail Corporation will take responsibility for all aspects of the power retail relationship with contracted, contestable customers on the day of its operational commencement. For residential and business customers still subject to the government’s pricing order and those customers nominated to be on legacy contracts, all bills issued to such customers will continue to be prepared and branded by the Power and Water Corporation for a period of time enabling competition. As a pro-competitive measure, clause 10 of the Power Generation Corporation Bill provides that the corporation will be prevented from being a retailer of electricity for a period of five years from its establishment. Similarly, the Power Retail Corporation Bill prevents the corporation from generating electricity for five years. The purpose of this measure is to prevent each corporation from using its market power to dominate the electricity market. This is designed to give space to private retailers to operate effectively in the Territory market. Clause 11 of the Power Generation Corporation and Power Retail Corporation bills includes a process of review so that if after the initial five-year period the interests of competition necessitate an extension of the exclusion period, then there is a mechanism for that to happen. Establishment of the new corporations: clause 6 of both the Power Generation Corporation and Power Generation Corporation bills provides that the new corporations will be established as a government owned corporation. Each will have its own Chief Executive Officer and a professional board of directors and will be operated on commercial lines. Importantly, the new corporations will have no vested interests as to whom they conduct business with and, as such, will operate on purely commercial terms. Through amendments to the Power and Water Corporation Act the existing Power and Water Corporation will retain its existing monopoly businesses. This includes the water and sewerage businesses, including the associated retail functions. The power networks business including all aspects of metering and relevant network control operations and gas purchasing. The Power and Water Corporations functions have also been expanded to allow it to provide shared services such as billing, accounting and payroll to the newly-established government-owned corporations in the event that this is necessary during the establishment phase. Electricity market reform - the establishment of the power generation and power retail corporations will represent an important step in the wider reform of the electricity market in the Northern Territory. This government’s reform of the Territory electricity market is based on two key pillars. Firstly, the reforms are designed to improve the competitive environment, to make it more attractive for private sector to enter the electricity market and provide competitive electricity services to Territorians and Territory businesses. The second pillar to the reforms involves making a number of structural changes to the various businesses that are currently owned and operated by the Power and Water Corporation. The current structure of the Power and Water Corporation has not been conducive to efficient supply of electricity to the Territory market. Essentially, there are two distinct problems that the structural separation seeks to address. Firstly, the operation of a vertically and horizontally-integrated utility has proven to be administratively complex to the detriment of the financial performance of the corporation. The integrated structure of the corporation has also reduced financial transparency and accountability and made financial performance monitoring of the various parts of the business more difficult. This has undermined incentives for the corporation to be managed efficiently. The structural changes are designed to improve the performance and efficiency of Power and Water Corporation’s businesses. The changes are designed to give Territorians confidence that these government-owned electricity businesses will be professionally run and accountable for their performance. Finally, the changes are designed to give confidence to the private sector that if they can choose to compete with the government’s electricity businesses, they can do so fairly and on a level playing field. The administrative changes: changes are also being made to the Government Owned Corporations Act to provide an appropriate mechanism to transfer the assets, liabilities, contractual rights and obligations of the power retail and the power generation businesses of the existing Power and Water Corporation to the newly established corporations. This is being achieved with the inclusion of a new part in the act that sets out a regime for making regulations to transfer businesses from one government-owned corporation to another. Through amendments to the Government Owned Corporations Act, the board will be responsible to the shareholding minister for the operation of the corporation. The board, after consulting with the shareholding minister will appoint the corporation CEO. Further, it will be optional for the CEO to be a member of the board. This will enable the composition of the board to be more flexible to an individual government-owned corporation’s needs. In terms of the shareholding minister it is worth noting that the delineation of responsibilities between the shareholding minister and the portfolio minister has often been unclear, given both ministers have the power to direct a government-owned corporation, but with different objectives. In recognition of the issue, amendments to the Government Owned Corporations Act will clarify those roles. Employee protections: the creation of the new power generation and power retail corporations will involve the transfer of the substantial number of employees that are currently employed by the Power and Water Corporation. The transfer of these employees will be achieved under provisions of the Public Sector Employment and Management Act. Importantly, the transfer of employees to the new corporations will not affect their terms of employment or any of their existing rights. The bills provide that employees of the new corporations will have the same protections they currently do under the Power and Water Corporation Act. Clause 8 of the Power Generation Corporation and Power Retail Corporation bills make it clear that the Public Sector Employment and Management Act will continue to apply to employees of the new corporations with each CEO being the Chief Executive Officer for the purposes of that act. The bills provide a small number of exemptions from the Public Sector Employment and Management Act which are consistent with the exemptions provided to the Power and Water Corporation. These exemptions are necessary to resolve inconsistencies in the ministerial oversight that exists between the Public Sector Employment and Management Act and the Government Owned Corporations Act. In addition, it is worth noting that clause 14 of the Power Generation Corporation and Power Retail Corporation bills provide the new corporations’ employees with protection from personal liability for acts done in good faith in the course of their operations. This is the same protection currently afforded to employees of the Power and Water Corporation. Transition to full operations: the establishment of the Power Generation and Power Retail Corporations is legally intended to take place prior to 30 June 2014, but the full transfer of the generation and retail businesses will be delayed to 1 July 2014. This will allow time to establish governance processes and put management teams and systems in place so when the new corporations assume responsibility of the businesses it will be a seamless exercise. The establishment of these new corporations to take over the power generation and power retail responsibilities of the Power and Water Corporation is a significant step on the path to a more efficient and more competitive electricity market in the Territory. These legislative reforms also bring the structure of the Territory’s government owned utility provider into line with electricity companies, both public and private, with the rest of Australia and will greatly assist the corporations in becoming financially sustainable and efficient organisations an important assets to all Territorians. Madam Speaker, I commend these bills to honourable members and table the explanatory statements to accompany the bills. Debate adjourned. |