This article is more than 1 year old

This article is more than 1 year old

The Queensland state government has emerged as the latest thorn in the side of what is left of the government’s “big stick” energy legislation, warning it could lead to the unpopular privatisation of state-owned assets.

Queensland’s energy minister, Anthony Lynham, has called on the federal government to bring its much vaunted energy market misconduct bill to the next state energy ministers meeting for discussion.

The objections come as the federal energy minister, Angus Taylor, will on Friday confirm that the Morrison government has received more than 60 submissions for its program underwriting new power generation assets.

Taylor says the proposals for new power generation include coal, gas and hydro.

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The government has not released the submissions, but some of the applicants have outed themselves. One proposal is a $6bn plan by power baron Trevor St Baker for two new coal power plants.

The underwriting program, as well as the “big stick” legislation, has been blasted by a number of stakeholders. There has been criticism about the short timeframe for the program, and the Australian Industry Group has warned it could leave taxpayers exposed to liabilities “with a net present value of billions of dollars” because the government could indemnify projects against the costs of new climate change policies.

In his submission to the parliament committee reviewing the “big stick” legislation, Lynham echoes concerns from power market players that the bill risks investment uncertainty, as well as providing at least three pathways to force the sale of Queensland-owned assets to the private sector.

The privatisation of electricity assets, pushed through an asset recycling fund introduced by the Abbott government, has come under fire in recent years.

The sell-offs have left governments with little recourse to tackle high prices. Queensland voters are particularly averse to privatisation, voting out both major parties in the wake of privatisation programs.

While acknowledging the bill includes an exemption to allow government corporations to “dispose of assets to a related or associated government authority in certain circumstances”, Lynham said the legislation contains enough uncertainties to pose a “significant risk” state assets could be sold.

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“The exception for state authorities in the legislation appears to apply to Queensland [government-owned corporations] but it is unclear, based on the definition of a state authority in the competition and consumer act, whether this exception would apply to a subsidiary of these organisations, such as Ergon Energy and Energex,” Lynham wrote, naming the retail arms of Queensland’s power companies.

“Due to the uncertainty around this term and how it would apply in the Queensland context, there is a risk that a divestiture order which targets public assets owned by a subsidiary of a Queensland Goc, could be required to privatise these assets.”

Lynham said the legislation could potentially allow for privatisation of state-owned assets if the state authority was not considered “genuinely in competition”, and noted there was nothing stopping a state government from selling an asset to the private sector, as was once the policy of the state LNP.

When introducing the legislation late last year, the treasurer, Josh Frydenberg, sought to allay concerns the bill could lead to the privatisation of state assets, in a bid to ensure the support of the key crossbencher Bob Katter.

“If there is a divestment as last resort of a government asset, then it will be as another government entity,” Frydenberg said in December.

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Katter, not entirely convinced, introduced his own amendments to the bill, which would specifically prevent privatisation.

The Queensland submission, which comes on the back of energy and business market players who are critical of the legislation, is the latest hurdle for the government to overcome, after promising to tackle energy prices during Malcolm Turnbull’s reign as prime minister.

Upon taking over the party leadership, Scott Morrison appointed Angus Taylor the ‘minister for lowering electricity prices’ and promised a “big stick” approach to combating perceived misconduct by power companies, which would have allowed the minister of the day to forcibly break up energy companies.

Following partyroom discomfort with the measure, the final product was watered down to where divesture could only occur at the direction of the federal court, as a last resort, if previous warnings, including injunctions from the Australian Competition and Consumer Commission, were ignored.

The government’s attempts to have the legislation passed in the final sitting week of 2018 were derailed by Labor, with the opposition successfully hijacking the debate through procedural motions, which saw it put off until February at the earliest.