8 September 2004

Mr Peter Beattie,
Premier of Queensland,

Defects in the Independent Panel's Review of the Electricity Network

As you may recall I responded to your claims about the State Government's limited responsibility for the under-development of Queensland's electricity network in an email of 23 August 2004 (see 'Premier's men insulated from blame'). I argued that it is not enough for government to just identify and fix problems that arise, and in particular that:

• government needs competent technical support to minimize the number of problems which arise in the first place, and that
• effective arrangements must be in place for governance of the electricity industry in the competitive environment to which it is now subject.

I now note that you tabled in Parliament a speech in which the chairman of the Independent Panel which reviewed the electricity network gave a 'there-is-no-real-problem-here' interpretation of his Panel's Electricity Distribution and Service Delivery in the 21st Century report. His speech was also published (see outline in 'Electricity we can rely on', Courier Mail, 3/9/04).

Unfortunately this raises even more serious concerns about the governance of the electricity industry because:

• the Panel's review was clearly not a comprehensive assessment of problems in the electricity network. The chairman's speech revealed that his Panel had focused on defects in the Government's regulatory role - and, in fact, its terms of reference were basically limited to regulatory issues and internal industry procedures. Thus the Panel apparently simply did not deal with problems in the electricity networks which arose from the Government's ownership role (a role which means that the Government is actually the responsible service provider, and that there is a complex relationship between the electricity industry and Queensland's public finances);
• the Independent Panel did not seem to draw attention to this apparently serious defect in its terms of reference.

Furthermore, effective governance perhaps requires careful attention to the potential for conflicts of interest where private firms are key technical advisers to government and might also hope to profit from substantial contracts if they do not cause political embarrassment.

The latter problem is analogous to the effect that political manipulation has had on Queensland's Public Service over the past 15 years, because (as you will be aware from previous correspondence) independent professional accountability has not really had to be taken seriously.

These points are elaborated in an updated document, Failure in Queensland's Electricity Distribution Network.

Your faithfully

John Craig