SYNERGY — 2018–19
ANNUAL REPORT
892. Mr D.C. NALDER to the Minister for Energy:
Can the minister confirm that under
his leadership, Synergy's $650 million loss is the worst performance by
a government business in the history of Western Australia, even worse than
Rothwells during the WA Inc years?
Mr W.J.
JOHNSTON replied:
I would have thought that a person
who ran a significant business in Western Australia would understand the
difference between a writedown and a loss. I also would have thought that a shadow
minister, who was told by the minister during estimates that he was asking
Synergy to look at writedowns, would have followed up on that between May and
September, but apparently neither of those things are true of the member for
Bateman. Let me make it clear: Synergy's $5.4 million loss is reported,
as I have pointed out to the member, in Synergy's annual report. As the
member knows, the writedown is the reduction in the expected value of its
assets. I was interested on the weekend to read an article that stated that in
2015, Synergy was valued at $1.3 billion. I remind the member for Bateman that
that valuation of $1.3 billion represented 50 per cent of the $2.57 billion
cash that his government put into Synergy. Remember this: the former government
put $2 570 million cash into Synergy, and after it put in that $2.5 billion,
Synergy was worth $1.3 billion. If the member wants to talk about a loss, that
is what we find. If that is the way he wants to look at it, $1.3 billion was
lost by the former government. As I made it clear when I spoke in Parliament
and tabled the annual report, the Synergy's writedown comes in two
elements. The first is the revaluation of its fixed and other assets to truly
reflect its future value. The second is the contract effect for a gas contract
signed by the former government. I make the same point again: the contract that
the former government signed was appropriate at the time. At that time
everybody in Western Australia thought that gas prices were going to increase.
I made no criticism of the government's decision to enter that contract
at the time and I make no criticism of it today. However, the professional
advice following on from an extensive process of consultation by the Synergy
board is that Synergy needed to take a $154 million charge against that
contract. The loss was $5.4 billion. Any other suggestion shows that the member
for Bateman must have been hanging on by his fingertips in running those two
important institutions in this state if he does not understand the difference
between a writedown and a loss.