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Parliamentary Questions


Question Without Notice No. 892 asked in the Legislative Assembly on 16 October 2019 by Mr D.C. Nalder

Parliament: 40 Session: 1

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.