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Tasmania, the Unwell State

Published: in Australian News by .

“I hit the wall and I was quite unwell.”

“I hit the wall and I was quite unwell.”

After a week in hospital these were the words of an overworked Premier. Yet there is no way that this man will let go of his position as Treasurer, a position he has held since the Hodgman Liberal government was elected in 2014.

As the keeper of the books, he knows where all the dead bodies are buried, and that the state is virtually bankrupt, only surviving on cargo cult handouts from his mates in the Federal Liberal Party as they buy Tasmanian votes to remain in power.

“I hit the wall and I was quite unwell.”

In April 2017, Peter Gutwein was referred to the Legislative Council for contempt of Parliament, following his refusal to provide an unredacted version of a report – The Sale of the Tamar Valley Power Station – to the Public Accounts Committee.

There is a history of incompetence regarding that power station.

This giant white elephant was commenced with a contract price of $450 million in 2007 for Babcock and Brown, about to be owners of the gas supplier Alinta. Alinta was to receive some $600 million for a contracted 25-year gas supply — as agreed and supported by the Lennon state government. This contract allowed a group of financial spivs at B&B to borrow the money to build this now mothballed state-owned project.

B&B went into liquidation in 2009. Just before it died in 2008, in a rapid-fire transaction, it sold the partly-constructed power station to the state government for $100 million plus ongoing completion costs, the contract being signed on our behalf by that financial genius Michael Aird.

The poisoned chalice was then passed to Aurora Energy who blew a further $260 million to complete a gas-eating power station because of a locked-in, long-term Take or Pay contract from 2009.

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Tasmanians are blessed with hydro power to generate our electricity. Yet since 2009 we have had a gas-fired power station as backup in case it did not rain.

This turned a small community on a small island with the world’s cheapest power source into the world’s 11th most expensive place to generate electricity. That is unless you run a Bell Bay smelter, but who cares, for every three months the mug Tasmanians will still pay their electricity bills just to keep the three Tasmanian smelters in business.

This gas-fired power station is now mothballed but the Take or Pay contract, or its successor, is still the killer

“I hit the wall and I was quite unwell.”

Hydro Tasmania’s annual report in 2020  stated that it had entered into an ‘onerous contract’ ordered by Treasurer Peter Gutwein and then minister for energy Matthew Groom. The total loss due to the contract is likely to be much larger as the wind farm’s 31 turbines are progressively commissioned during 2020.

The loss is recorded in Hydro Tasmania’s accounts as a ‘community service obligation’ incurred to ‘facilitate the construction of the Granville Harbour Wind Farm’. The potential loss on the Granville Harbour Wind Farm contract was included in a $195.8 million provision for losses on ‘onerous contracts’ disclosed in the utility’s 2018-19 Annual Report on page 37.

The utility defines an ‘onerous contract’ as one where the ‘unavoidable cost of meeting contractual obligations exceeds the economic benefits to be received’.

It declined to disclose the current estimated loss on the Granville Harbour wind farm agreement, saying the magnitude was ‘commercial in confidence’. A spokesperson said 52 other contracts were included in the $197.8 million provision but did not identify which companies they were with, what the estimated losses on each one was or whether they included other wind farm agreements.

Hydro Tasmania now has a provision for over $260 million for ‘onerous contracts’ for renewable energy certificates from wind farms, gas contracts and lease liabilities. No breakdown on the projected losses is publicly available. Why Premier Gutwein, why?

Hydro senior staff have left in droves, its CEO Evangelista Albertini left this week after less than a year in the job. Now the Treasurer is going for another Bass Strait cable … why?

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Gutwein is still the Treasurer and the useless Guy Barnett is the government director on the board of Hydro which is sacking staff as it heads towards bankruptcy as interest rates inevitably rise.

At least Hydro and the government won over $100 million from Keppel when the adjudicator confirmed that God works for Tasmanians and not for an underwater cable company in a foreign clime. Now Hydro should buy the cable instead of paying a virtually bust Keppel to use it, they hold all the cards.

“I hit the wall and I was quite unwell.”

The Premier has an enormous workload in his own right, forced to spend his time rounding up cats and running the state while his more than useless team of Liberals create wildfires everywhere and every day. Moving the site for a proposed prison to a protected public reserve springs to mind, yet according to the Attorney-General all while she was in full consultation with her adoring public.

John Lawrence in Tasfintalk Thursday, 2 September 2021 notes:

Gutwein’s grand delusion

As Saul Eslake recently observed, relative to our size [our debts] are larger than all other states and territories except for Northern Territory. Premier Gutwein always likes to draw attention to our low borrowings, our net debt, compared to other states. This is deliberately misleading. It’s our total financial liabilities that’s the relevant metric.

It’s not that we should alarmed by debt per se. Interest rates are low and debt servicing costs are low. It may only cost $2 per to service a $100 loan but it still costs $100 to repay the amount. There’s no likelihood of that occurring in the foreseeable future. That’s the issue we should be discussing. The current budget is designed to please, is based on a deliberate distortion about our current situation ,and ignores the fiscal cliff ahead. It is not a plan for the future. We deserve better.  

We must, must, must, must, return the Tasmanian House of Assembly to its proper size and give up electing party hacks, liars, maaaates and no hopers.

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Will our state hit that wall?

Like Mr Gutwein, this state is desperately unwell.

John Hawkins was born and educated in England and now calls Tasmania home. He is the author of ‘Australian Silver 1800–1900’ and ‘Thomas Cole and Victorian Clockmaking’ and ‘The Hawkins Zoomorphic Collection’ as well as ‘The Al Tajir Collection of Silver and Gold’ and nearly 100 articles on the Australian Decorative Arts. He is a Past President and Life Member of The Australian Art & Antique Dealers Association. John has lived in Australia for 54 years.

Source: Tasmanian Times

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Finance Advice 2021