The Senate has put a speed bump in the way of NSW Premier Mike Baird's major election pledge, the $13 billion sell-off of nearly half the state's electricity assets in returns for billions of dollars of federal assistance for new infrastructure.
On Thursday, the Senate voted to establish an inquiry into Treasurer Joe Hockey's plans to hand out billions of dollars in federal cash to encourage state governments to reinvest the proceeds from privatisations back into the building of new infrastructure.
NSW stands to receive nearly $2 billion from the planned electricity privatisation promised by Mr Baird under Mr Hockey's $5 billion "asset recycling" war chest.
The Senate economics committee will report back four weeks before the NSW state election in March 2015.
The committee has no power to stop Mr Hockey's plans to allocate cash to "asset recycling" but could raise questions about the legitimacy of the scheme.
The inquiry, which was immediately condemned as a "desperate stunt" by Mr Hockey, will investigate the "appropriateness of the Commonwealth providing funding, and the capacity of the Commonwealth to contribute an additional 15 per cent, or alternative amounts, of reinvested sale proceeds".
It will also investigate whether cash earmarked for projects such as Sydney's slated WestConnex toll road have had cost-benefit analysis and passed productivity hurdles before federal money is pledged.
The inquiry, proposed and to be chaired by Labor senator Sam Dastyari, is supported by the Greens and Palmer United. Short the numbers to block its establishment, the government was forced to wave it through.
Palmer United senator Glenn Lazarus has reservations about the plans of Queensland Premier Campbell Newman to raise $28 billion through a long-term lease of his state's electricity transmission networks.
In September, Mr Baird won cabinet backing to sell 99-year leases for NSW transmission company TransGrid, as well as metropolitan area networks owners Ausgrid and Endeavour Energy.
Electricity privatisation has been politically explosive for NSW and the NSW Labor Party, which tore itself apart over the issue. Labor under John Robertson is again opposing privatisation.
Senator Dastyari said: "The asset recycling scheme is a rort. This is just the federal government giving subsidies to encourage privatisation. This is about helping Michael Baird privatise electricity assets as part of an ideological agenda.
"If the government was fair dinkum they would be supporting NSW infrastructure without slugging them on their power bills."
Mr Hockey said all states were on board with the $5 billion asset recycling fund.
"It is a desperate stunt from an opposition devoid of any appetite for reform," he said of the inquiry.
Senator Lazarus said he was opposed to using public money to encourage the sale of assets.
"This is not an appropriate use of taxpayers' funds," he said.
Senator Lazarus said he was "deeply concerned" by the Newman government's decision to privatise electricity through long-term leases.
"Normally, governments responsible for economies which are strong, well managed and growing don't need to resort to such irrational urgent cash-making actions like the Newman government is resorting to in Queensland," he said.
"Only governments devoid of ideas and the capability to develop and deliver growth strategies sell off assets. This thinking is dumb, short-term oriented and irresponsible."
