The Government has confessed to the Senate that it has spent $600K on lawyers to prevent the early warnings signs of Snowy 2.0 cost and schedule blowouts from being made public. Transparency Warrior Rex Patrick reports.
Slow Motion Blow Out
Snowy 2.0 was announced in March 2017. At that time the project’s estimated cost was $2 billion and its completion time was to be four years – that is, up and running in 2021.
The price tag was disingenuous from the start because, at the time of the announcement, Snowy Hydro was owned jointly owned by the Commonwealth, NSW and Victoria. On 29 June 2018, the Federal Government paid NSW and Victoria $4.154B and $2.077B respectively to buy their stakes.
In February 2019, the Government announced a price doubling of Snowy 2.0 to $4.5B (with the taxpayer’s injecting $1.38B) and it moved the completion date out to 2024. Six weeks later a major works contract was signed for $5.1B (a further increase in price of $500M).
In August 2023 a “reset” occurred, with the project cost doubling $12B, with another $2.6B taxpayer equity injection and a $4.5B loan.
But the story gets worse.
The Warning Signs Are There
MMW has written extensively on Snowy 2.0, warning readers about the pending blowouts. In early July this year Ted Woodley, former managing director of PowerNet, Gas Net, EnergyAustralia and China Light & Power Systems, warned our readers that the cost for the project would hit $25B.
That article came two months before Snowy Hydro conceded publicly that $12B was not enough, and three months before the revelation that CEO, Dennis Barnes, got an annual bonus of $322,504, despite the new cost blowout.
Better than Ted Woodley’s astute observations though, every month Snowy Hydro has to provide an ‘earned value’ project management report to its shareholders (the Minister for Energy and the Minister for Finance). This report gives a real time indication of whether the project is on time and on budget.
That’s why, in April 2023 (before the reset) MWM requested access to the (then) latest project reports. Access denial, denial, denial was the response. That led to proceedings in the Administrative Review Tribunal where the writer fought for access against two sets of lawyers (Government and Snowy’s) and two sets of barristers, unfortunately to a loss.
The matter is now on appeal in the Federal Court.
Legal cost avalanche
After Barnes took hold of Snowy Hydro’s reins in February 2023 he committed the company to greater transparency. In the 2022/23 annual report he wrote, “We are committed to transparency, accountability and balancing the interests of our stakeholders, the communities and environment in which we operate, our customers and our employees.”
Sometime before April 2024, when Snowy Hydro voluntarily joined into the Administrative Review Tribunal proceedings, he must have had a change of heart. Thanks to Senator Jacqui Lambie, we now know that Barnes and the Government spent $507,506 in the Administrative Appeal Tribunal’s proceedings.
Legal Costs (Source: Senate Questions on Notice)
Just to be clear, that’s $507K of taxpayer’s money – because all money spent by Snowy Hydro on legal fees is taken from the dividend returns to the Government.
We know from previous answers that Commonwealth’s lawyer’s (the Australian Government Solicitor) costs were sub $100K, which means that Snowy Hydro’s lawyers (King & Wood Mallesons) costs were circa $400K. Same legal fight for both sets of lawyers, very different legal costs. Perhaps this gives us a hint as to why Snowy 2.0 is so over budget.
More costs to come, embarrassing
The Federal Court has recognised that round two of the legal fight is a public interest matter. When the writer applied for a protective cost order so that he wouldn’t lose his house over a quest for the transparency that Barnes had promised, the Government and Snowy Hydro opposed the order.
They lost (embarrassingly against a self-represented litigant) with the Court restricting any future adverse cost order to the author of $40K. That loss jointly cost the Government and Snowy Hydro (i.e. the Taxpayer) another $88K.
If the Administrative Appeal Tribunal proceedings are anything to go by, they’ll spend another $500K trying to keep project blow-out indicators top secret.
A million bucks to prevent the public from seeing whether costs in this taxpayer funded project will continue racing into a black hole like a overloaded bob sleigh at Perisher.
And in the background we’ve got Prime Minister Anthony Albanese complaining that costs of processing Freedom of Information requests are avalanching. But the truth is, instead of standing on the high ground of Transparency Mountain, he’s down on the low road in the midst of a FOI costs avalanche of his government’s own making.
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Rex Patrick is a former Senator for South Australia and, earlier, a submariner in the armed forces. Best known as an anti-corruption and transparency crusader, Rex is also known as the "Transparency Warrior."