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Mr MIKE BAIRD (Manly) [4.13 p.m.]: The Opposition supports the Waste Recycling and Processing Corporation (Authorised Transaction) Bill 2010. The Opposition has articulated for a considerable period of time that this business should be sold. Indeed, this is the only State Government to retain such an ownership. It is time to examine private sector options and solutions to some of the significant challenges this industry faces. However, the Opposition has some key concerns with the bill and foreshadows that it will move two amendments in the upper House. Currently, we are negotiating the wording of those amendments, but I am pleased to say that at this stage the Government appears to support them in principle. As far as the taxpayers and the broader New South Wales community are concerned, that is a good thing.
The object of the bill is to transfer to the private sector the State-owned waste disposal business of the Waste Recycling and Processing Corporation. That the Government is both operator and regulator of this facility has been of considerable frustration to many participants. The bill addresses this anomaly by having that conflict removed at the conclusion of this transaction. Removing that conflict should be the central premise of this transaction. However, we understand that some assets will be retained in government ownership. Landfill is a declining business due to the growth of alternate waste technology. Developed alternate waste technology facilities require ongoing investment in technology and capital. In this country and globally the private sector innovates strongly in these forms of technologies. Certainly, environmental outcomes can significantly improve those technologies. We support this transaction in the hope that alternate waste technology in this State will be enhanced. We trust that the Government will address that particular aspect of our proposed amendments.
At the heart of our concern is that the State Labor Government has a habit of taking the jam for today and failing to plan for tomorrow—that is, taking the cash today and leaving the problems to others. I do not want to harp on about what happened with unfunded superannuation in this State, but from most recent reports we still have about $30 billion in unfunded superannuation. The contrary approach of the Federal Government to unfunded superannuation was to set up the Future Fund in anticipation of such a problem and the position now has been reached that the liability is fully funded in Canberra. Instead, New South Wales has $30 billion in liabilities that continue to drag this State. We do not want to see a replication of problems by the Government selling part of the waste assets, taking the money and forgetting about the liabilities.
I am pleased that the Government has indicated its agreement to our amendments to ensure that all future long-term liabilities are met by the cash proceeds from the sale. Obviously, by hanging on to the rump of the transaction, for want of a better expression, spending those funds on other short-term purposes will expose New South Wales to picking up liabilities through subsequent budgets by selling whatever assets remain. In practical terms that means less money for health, education and the Department of Community Services to deal with the liabilities that will be retained by the State as part of this transaction. It is in the State's interests to have a clear proposition that any funds raised through this transaction are retained for the purpose of meeting all liabilities. Therefore, future problems will be dealt with today. That discipline should be demonstrated by this Government. As I have said, the Opposition will move amendments in the upper House, subject to agreement on their wording.
The purpose of the bill is to authorise and facilitate the transfer to the private sector the rights, assets and liabilities of the Waste Recycling and Processing Corporation, trading as WSN Environmental Solutions. This corporation was formed by combining local government landfill operations and was corporatised in 2001. WSN Environmental Solutions owns and operates landfills and kerbside waste collection, provides waste management services, and conducts research and alternate technology. The bill provides incredible flexibility to the Treasurer to facilitate the sale, and this is where the issue of trust enters the equation. Ultimately, the Treasurer will be able to execute this sale under almost any structure, any terms and any forms. For any Treasurer to have such flexibility is an ideal proposition, but we acknowledge that this is a complex transaction.
We acknowledge also the significant and intricate environmental concerns, the liabilities and the competition issues to be addressed. I understand fully the need for this flexibility. However, we note that the Auditor-General will oversee the transaction at the conclusion. We will ensure that the best possible outcome has been achieved for the people of New South Wales. The Opposition contends that without the amendments suggested by it and presented in the upper House, the Government's legislation would have enabled the Treasurer to sell under any transactional structure and commit the proceeds of the sale to unrelated purposes, with intention of retaining liabilities and dealing with them in future budgets. The Opposition rejects that methodology. We are pleased that the Government has agreed with the amendments that the Opposition has proposed.
In general terms the key elements of the legislation are that part 2 authorises the transfer of WSN Environmental Solutions to the private sector and part 3 facilitates that transaction through one of the following methods: direct vesting of assets and liabilities, converting WSN to a Corporations Act 2001 company by transferring shares or establishing a new company. The selection of the appropriate method will be part of the negotiations between advisers and the Government with a view to achieving the best method as well as the best result. The Opposition is au fait with that approach. Clause 14 of part 3 establishes the Waste Asset Management Corporation, which will be under the control of the Treasurer. The corporation will retain and manage sites that are not transferred. A general manager and staff will be appointed to the new corporation. As the Opposition understands this proposition, the corporation will receive assets that have not been sold.
By implication the assets transferred to the corporation will come with a liability value that may be in excess of the value of the assets. As a standard procedure, that would mean that more will be owed than is retained in the entity as assets. The Opposition is concerned about liabilities that accompany this transaction. The State needs to be very careful to ensure that liabilities are dealt with in a prudent and fiscally responsible manner. That would be the outcome if the proceeds of sale were applied directly against liabilities to reduce them. Schedule 4 deals with the transfer of WSN employees as well as their rights and entitlements, which include a three-year employment guarantee for permanent employees, or the option to remain in the public sector. That proposition is along the lines of similar transactions that the Government has been involved in, and the Opposition understands the Government's approach.
The transaction proposed by the Government is not based on a universally accepted proposition. As a whole, the private sector supports the sale, but I urge the Minister to respond to some of the comments expressed by the industry during his reply. The Government for more than a year has withheld publishing the Wright review's report on waste processing and disposal capacity and capability across Sydney. The Opposition would like to know why the report has not been released. We would like to know also whether non-publication of the report has played a role in the shape of negotiations relating to the current transaction, or has a purpose in relation to other matters of which the Opposition is not aware. The Opposition calls on the Government to release the report and provide information associated with the review. If the Government is claiming that its process is transparent, it should have no fear of releasing a report on a review that has examined the very issues upon which the legislation is based. I am sure the report articulates general concerns that have been expressed and would provide information for anyone interested in bidding for waste management and recycling businesses.
Concerns have been expressed about the creation of a monopoly. Clearly, the Australian Competition and Consumer Commission will be required to sign off on the transaction but, as matters stand, effectively WSN is a monopoly. It is untenable for a public sector monopoly to be replaced by a private sector monopoly. The Treasurer has the ability to address and change the structure to ensure that concerns relating to competition are addressed. The Opposition's proposed amendments address that issue. The Local Government and Shires Associations in principle do not wholeheartedly support the transaction but are philosophical, provided that safeguards in relation to environmental and social wellbeing are preserved.
The Opposition's proposed amendments address that issue and go part of the way towards addressing some of the issues raised by the Local Government and Shires Associations. The Government should refine its strategies in relation to the way in which it deals with this sector. It is one thing to take an asset out of the equation, but in the context of implications for the environment, how we will reduce the number of landfills and accelerate some technological advancements through alternative waste technology? They are critical points that need to be addressed by the Government and this bill. The Opposition requires more direction and more information from the Government in relation to those concerns. We agree with concerns expressed by stakeholders and community groups regarding this legislation.
The Government's proposed strategy was announced in November 2008 as part of a mini-budget. The value of the transaction at that point was approximately $400 million. The market is uncertain relative to the value of the transaction that will be realised in 2010. Clearly the Opposition is none the wiser about the ultimate price the Government will receive as a result of this transaction. However, sale proceeds seem to be somewhat less than purported by the mini-budget. The Minister should address during his reply the reasons for the apparent reduction in value of the sale since 2008. The value of $250 million or $300 million seems to be suggested more often than is the value of $400 million.
The Government should clarify whether the reduction in the estimate relates to outstanding legal claims. The Opposition understands that there is at least one material outstanding legal claim that remains to be addressed. We understand that the matter has reached a commercial conclusion, but we suspect that that has impacted upon the estimates of sale proceeds. The Opposition is interested only in transparency of the transaction. We want to understand exactly what has transpired in relation to the assets and liabilities and their current status at this point. The market perceives potential value from the sale. A number of commentators indicate that in the vicinity of $250 million to $300 million may well be realised.
The concerns I have outlined form the basis for the amendments that will be put forward in the Legislative Council. While the Opposition supports the sale of WSN and believes that the transaction is capable of being fully served, as the legislation currently stands, and without the benefit of Opposition amendments, the Government will have the opportunity to maximise sale proceeds and apply that to whatever purpose it sees fit. The Government has not articulated the purposes to which the sale proceeds will be applied. The Opposition strongly suspects that the Government's failure to mitigate liabilities associated with the sale will expose future budgets to failure. I cannot overstate the critical importance of that element.
If the Government attempts to deal with liabilities associated with the transaction at some stage in the future instead of as collateral to the sale transaction, the cuts that will have to be made to government expenditure to deal with those liabilities will come from front-line services provision, such as in health, education and policing. I do not wish to be part of any transaction that does not deal today with current financial problems. We cannot go on engendering a culture of dealing with today's problems tomorrow. Let us deal with them today. By applying the sale proceeds, the Government will have the ability to do exactly that in relation to the assets and liabilities associated with the transaction.
The Opposition has asked the Treasurer for an independent view that quantifies liabilities and the plan to mitigate them. The Government has given me a verbal undertaking that it will provide an independent view of what future liabilities there may be. The Opposition will wait to see what they are, but we suspect that they will amount to tens of billions of dollars rather than hundreds of millions of dollars. We await with eager anticipation the correct figure that will be produced by an independent expert. From a parliamentary point of view, it is important for the Opposition to know how much will be retained at the point of sale as liabilities to the State and the cash that will offset liabilities in the longer term.
The Government has been silent on key issues, including competition. Today the Sydney Morning Herald reported local councils' concerns that the cost to ratepayers will increase if the monopoly is allowed to continue. The question begged is a very simple one: From the point of view of ratepayers and consumers in the State, what does this transaction mean? Does it mean that new operators will come in and start to renegotiate contracts with concomitant increases in charges for simple kerbside collections? Ratepayers and consumers will want to be clear about those important factors. The Government should provide more information and greater certainty in relation to charges.
There must be ongoing and proper management of contaminated landfill sites. The Government should not wash its hands of the waste sector but must have a long-term plan for waste reduction. The Opposition will support the transaction involving the sale of the entity with capital requirements and capability of the private sector, provided that the Government has a long-term waste reduction strategy. The Opposition will be waiting for information on strategies that arise from the transaction and the potential opportunities that may be pursued by application of the proceeds. My colleague and the shadow Minister for Climate Change and Environmental Sustainability will deal with that aspect of the legislation in greater detail when the bill is debated in the upper House. Currently the Opposition is negotiating the form of words in which amendments will be presented in the Legislative Council. I foreshadow that the Opposition will move those amendments in the upper House after finalisation of their terms.
There are two amendments. The first amendment relates to the establishment of a trust account. This is to ensure that all proceeds received from the transaction are applied directly to a trust account and held to meet all existing and future liabilities associated with the business. If excess funds remain these can only be released for general budget purposes for amounts in excess of the residual liabilities. Those residual liabilities will be determined by the independent expert, to which we have alluded, at the point of transaction. The proposition is fairly simple: an account will be established, at the point of sale all future liabilities that occur through the transaction or those retained by the Government—the total liabilities across those two elements—will be monetised by an independent expert and funds from the sale will be secured against those liabilities. That is essential. We are pleased that the Government has agreed to the amendment in principle, and we look forward to moving it in the upper House.
The second amendment relates to the overall lack of information about and strategy for this matter. We argue that on a timing to be determined, whether it be prior to the commencement of the transaction or at the earliest possible point, the Parliament should be furnished with a report detailing the intended consumer protection measures that will be put in place, which we have clearly spoken about, the advanced environmental outcomes that will be achieved, and the broad strategies to be employed to ensure the resolution of all competition issues. We understand that the Australian Competition and Consumer Commission will be signing off on the transaction. However, it is important to understand how the Government intends to make the sector competitive, as competition will ensure that rates remain as low as possible and consumers are protected. The last thing we want to do is hand over the business carte blanche to a private sector monopoly, which is in no-one's interests.
In conclusion, although the transaction provides the Treasurer with unfettered flexibility, the Liberal-Nationals Opposition has long supported and proposed the sale of this asset. So in many respects we are pleased that the Government has again adopted a sensible Liberal-Nationals policy, and the Minister should acknowledge that in his reply. This legislation will provide an opportunity to improve and grow the sector and facilitate waste reduction, which is ultimately what is driving it. At the same time we argue strongly that the amendments proposed and agreed to in principle by the Government will significantly enhance protections for the people of New South Wales and potential outcomes, and provide the Parliament with much more information about the transaction than has been provided by the Government to date. We are happy to move forward. We will continue to negotiate directly with the Government. In that context, the outcome of those negotiations will be the form of words that will be moved as an amendment in the upper House. Until that point we are happy to support the transaction.
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