SYDNEY (Reuters) - The conservative government of Australia’s New South Wales state won re-election on Saturday, clearing the way for the country’s largest privatization, a stake in a state-owned electricity network for an expected A$17 billion ($13 billion). State Premier Mike Baird, who campaigned on a promise to lease 49 percent of New South Wales’ energy network to fund new infrastructure, held a predicted 53 of the 93 state Legislative Council seats, with just over half of the votes counted.
He survived a considerable swing against his government amid widespread anti-privatization sentiment by promising to use the proceeds to fund road and rail projects to ease congestion in traffic-choked Sydney. The result allows Baird and his coalition government to push ahead with a sale that already has attracted some of the world’s largest infrastructure investors, including China’s State Grid and several pension funds and sovereign wealth funds. “We sought a mandate to make New South Wales great and tonight the people of New South Wales have given us that mandate,” Baird told supporters in Sydney.
Voters have “chosen hope over fear”, he said, following an opposition scare campaign over the privatization plan.
As well as pumping cash into the debt-riddled economy of Australia’s most populous state, the sale will revive a federal government plan to sell A$130 billion of state-owned infrastructure nationwide.
Two months ago, the neighboring state of Queensland voted out its government over its proposal to sell A$30 billion of port and power assets.
While the electoral victory means Baird will press ahead with the electricity sale, it also means his questioning by the Australian authorities about his office’s dealings with sale adviser UBS AG will come under additional scrutiny. Earlier in March, Baird confirmed that his office had asked UBS, which is jointly advising on the sale with Deutsche Bank AG, to reissue an analyst report removing a reference to the sale being “bad for the budget”.
Corporate regulator the Australian Securities and Investments Commission said it had asked the government to hand over information about its communications with UBS, saying the bank may have failed to separate its banking and advisory work adequately. Baird’s victory will come as a relief for one of the country’s largest energy firms, Santos Ltd, which the opposition Labor and Greens parties had said they wanted to stop from proceeding with its A$2 billion Narrabri coal seam gas project in the state’s north. Baird’s government has been buying back coal seam gas licenses in the state to neutralize opposition to the controversial energy production method, but has agreed to let Santos proceed with its project.
($1 = 1.2909 Australian dollars)
Additional reporting by Morag MacKinnon; Editing by Gareth Jones