Gold-plating lifts power prices: Turnbull

11 Aug 2012, 5:01 pm   -   Source: AAP
Malcolm Turnbull says the

Malcolm Turnbull says the "gold-plating" of electricity infrastructure has caused power to rise. (AAP)

Opposition MP Malcolm Turnbull says the "gold-plating" of state electricity infrastructure has contributed more to power rises than the carbon tax.

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Opposition frontbencher Malcolm Turnbull says the carbon tax has contributed to electricity price rises, but has backed the government's view that the "gold-plating" of state government electricity infrastructure has contributed much more.

That's contrary to the view of Opposition Leader Tony Abbott, who says price rises are wholly down to the carbon tax, accusing Prime Minister Julia Gillard of fabrication in blaming the states.

Mr Turnbull said Ms Gillard did deserve a gold medal for chutzpah for seeking to minimise the impact of the carbon tax.

But he said states had contributed more to power price rises.

"Over the last five years or so in the east coast capital cities, electricity prices have gone up by about 50 per cent. This is pre the carbon tax. That has been largely a function of the investment in distribution and transmission, in poles and wires," he told Sky News.

Adding to the debate, federal Energy Minister Martin Ferguson said a new energy white paper, expected in October, would encourage all states to privatise their electricity utilities to promote competition and lower prices.

The opposition has persistently blamed electricity price rises on the carbon tax, which came into effect on July 1.

This week Ms Gillard sought to point the debate in another direction, blaming overinvestment in state power infrastructure for the rise in prices.

She gave the states four months to come up with solutions to slow prices rises or face market watchdogs with more powers.

Mr Abbott responded that the problem was not due to regulation, but to the carbon tax.

Mr Turnbull said monopoly electricity suppliers were permitted a commercial return on capital investment that was considerably more than the cost of borrowing.

"Because they are borrowing with the benefit in effect of a government guarantee, they have got a real incentive to invest and indeed to overinvest. This is what's called gold-plating," he said.

Mr Turnbull said the companies justified this on grounds it increased network reliability, an issue of great sensitivity to state governments who knew they would be punished by voters in the event of electricity blackouts or brownouts.

"In many cases they are spending billions of dollars, so it is argued, to reduce the chance of a brownout from very, very little to very, very, very little," he said.

Mr Turnbull said as a matter of principle the coalition did not favour governments owning such businesses.

"The sentiment in the coalition party room would overwhelmingly be that the government should not be in these businesses. But it's a matter for the states ultimately," he said.

Queensland Energy Minister Mark McArdle said there would be no power asset sales in his state without an electoral mandate.

"The Newman government has made it clear that privatisation would not occur without receiving a mandate from voters at an election," he said in a statement.

Liberal senator Mathias Cormann said Ms Gillard did have some tools at her disposal had she been so concerned about power prices rises.

"But of course she hasn't," he told Sky News.

"There is a world of difference between increasing electricity charges to make sure you can keep the lights on, to keep investing in the necessary infrastructure to keep electricity generation going, on one hand, and the self-inflicted non-productive additional costs that come from the carbon tax."

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