generic ernst & young, ernst and young, ey, Sydney, Friday 30th october 2015, photo: Ryan StuartAt least $74 million has been spent on marketing, lawyers and consultants for the privatisation of NSW electricity network businesses in what the state opposition has criticised as a “feeding frenzy” for the big end of town.
Treasury figures confirm that the biggest winner from the transactions was consultancy Ernst and Young, which reaped $24.5 million for providing financial, accounting and tax advice to the government.
Ernst and Young wrote the report used by the then Baird government to bolster its argument for partially privatising the NSW electricity network.
The report concluded that customers have paid lower charges in Victoria and South after privatisation.
Investment bank UBS was also a beneficiary, pocketing $13.9 million for financial advice.
The bank found itself at the centre of a political storm during the 2015 state election campaign over a report on the government’s power privatisation plans headlined “Bad for the budget, good for the state”.
The figures also show law firm Allens earned more than $20 million for legal advice, while public relations and lobbying firm Newgate earned over $900,000.
The costs are related to the government’s 99-year lease of all of high voltage transmission firm Transgrid and 50.1 per cent of distributors Ausgrid and Endeavour Energy for net proceeds of about $17 billion.
Total costs are expected to increase further as NSW Treasurer Dominic Perrottet said finalisation of the transactions are due at the end of this year after which further payments will be disclosed.
Answers to questions on notice at a budget estimates hearing also reveal that in 2015 the then government controlled Ausgrid and Endeavour and state-owned Essential Energy spent $7.2 million taking the n Energy Regulator to court.
They successfully challenged its determination that slashed how much they can charge customers.
Labor energy spokesman Adam Searle said the transactions “created a feeding frenzy for big end of town consultants, bankers and public relations operatives”.
“The $75 million it has spent so far is roughly a third of the rebates it is paying out to households struggling to pay their higher electricity bills,” he said.
Mr Searle described as “a scandal” the cost of the court challenge “to keep electricity prices high”.
But Mr Perrottet said Labor had “no credibility” on the issue.
“It’s well publicised that Labor regrets its failure to sell the poles and wires, along with everything else they failed to deliver,” he said.
Mr Perrottet said the transactions “allowed us to invest $20 billion in infrastructure the state was crying out for, including Sydney Metro, Parramatta Light Rail and Sydney Opera House, but its broader value to the NSW economy is priceless.”
A Treasury spokesman said the decision to take court action “was a matter for the businesses and not the NSW Government”.