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The State Government showed its hand too early and failed to keep records of vital meetings while negotiating the $16 billion lease of the electricity distributor Ausgrid, the NSW auditor-general has found.
Key points:
- 50 per cent of NSW electricity distributor Ausgrid was sold by the State Government for $16.1 billion in 2016
- A report into the sale found the State Government revealed its asking price too early
- NSW Labor leader Michael Daley said the report highlighted the "horrible" behaviour
In a report released on Tuesday, auditor-general Margaret Crawford found the Government "did not assure value for money was optimised" when it signed a 99-year lease for 50 per cent of Ausgrid in 2016.
As part of his 2015 election pitch, then-Premier Mike Baird promised to partially lease the state's electricity distributors, known as the "poles and wires" — including Ausgrid — to fund major infrastructure projects.
In August 2016, the Government received a bid from IFM Investors and AustralianSuper and less than two months later a $16.18 billion asking price was settled on.
The auditor-general found the Government disclosed what it believed to be a reasonable price for the asset too early in negotiations.
The then Treasury Secretary met with representatives from IFM Investors and AustralianSuper on 14 September, 2016.
According to speaking notes, he was to tell them a minimum acceptable price at which negotiations could continue.
"Later the same day, the proponent revised its proposal to match exactly the dollar price suggested by the Treasury Secretary," the report said.
The Government told the auditor it did not believe its negotiating position had been weakened because "the state would have divulged this information at some point anyway," the report said.
The Government also sought peer-reviewed financial advice, which concluded the final proposal represented value for money.
Speaking on Tuesday, Treasurer Dominic Perrottet said the report identified "administrative" issues which the Government would "take on board."
However, he said the it stood by its decision.
"I believe we got an exceptional result for the people of NSW," the Treasurer said.
'This is NSW Inc': Labor
The auditor-general was critical of the negotiating process in the report.
"Early disclosure of an acceptable price may have reduced the chance the proponent would offer a higher price than disclosed," the report said.
Opposition Leader Michael Daley said the report demonstrated "secretive" and "horrible" behaviour by the Government.
"This is not a government, this is NSW Inc," Mr Daley said.
"Baird and [current Premier Gladys] Berejiklian have always been about the deal, it's never been about the citizen, it's never been about the public good."
The report found minutes of two important meetings, when price was discussed, were also missing.
"No records were provided to show the Treasury Secretary had prior authorisation to disclose a specific price," Ms Crawford said in the report.
"The absence of key records means [Department of Premier and Cabinet] and NSW Treasury cannot demonstrate engagement and negotiation processes were authorised and rigorous."
Topics: electricity-energy-and-utilities, business-economics-and-finance, government-and-politics, defence-and-national-security, public-sector, nsw
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