The NSW government’s handling of the $16 billion privatisation of half of its electricity distribution assets reduced the likelihood of the state securing a higher price, the auditor-general has found.
NSW Auditor-General Margaret Crawford on Tuesday released a report into the government’s 2016 decision to lease 50.4 per cent of electricity supplier Ausgrid to AustralianSuper and IFM Investors for 99 years.
The deal, which then-premier Mike Baird called a “win-win,” was brokered through an unsolicited proposal, meaning it did not need to go to tender.
Ms Crawford outlines three areas of concern regarding the long-term lease of the poles and wires, including the government’s decision to disclose an acceptable price early in the negotiations.
The report details a meeting between the then-Treasury secretary and the two companies, where he told them his “personal views on the initial offer”, including a suggested price.
Later the same day, the companies revised their proposal to match “exactly the dollar price suggested by the Treasury secretary”.
The following day, the state entered a “participation agreement” based on the revised proposal.
The Department of Premier and Cabinet and NSW Treasury did not provide the auditor-general with the minutes of the meeting.
“Shortcomings in the negotiation process means it cannot be assured that optimal value for money was achieved,” the report states.
The auditor-general also refuted the claim that the bid was “unique” – a requirement of the NSW government’s unsolicited proposal guidelines
“The evidence did not show beyond doubt that no other proponent could have put in a viable bid or that there was no other way to conclude the lease transaction,” the report states.
“It is also not appropriate to determine that an unsolicited proposal is unique because it delivers an earlier outcome than possible through a tender process.”
The state government in 2014 announced plans to lease components of the state’s electricity network, holding a competitive tender process between November 2015 and August 2016.
But NSW abandoned the process in August 2016 after the federal government rejected two bids from foreign companies – one Chinese and the other based in Hong Kong – for national security reasons.
NSW Opposition leader Michael Daley said the report made him “cranky”.
“The people of NSW deserve better than this,” he told reporters on Tuesday.