Time for Snowy Hydro funds plan, NSW Govt says. 02/06/2006. ABC News Online


The New South Wales Government says the Prime Minister's decision to withdraw from the Snowy Hydro sale will lead to its "slow death".
Prime Minister John Howard had strongly defended the sale but backed down after mounting pressure from the community and his own MPs.
New South Wales and Victoria immediately pulled out of the deal, with the New South Wales Treasury stressing it will have no impact on next week's Budget.
NSW Finance Minister John Della Bosca says the Prime Minister has based his decision on populism.
"If you really do believe the Snowy is a critical national piece of infrastructure, if you really do believe that it's a national icon, then what the Prime Minister's done, unless we come up with a better answer, is condemn it to a slow death," he said.
"It needs anywhere between $300 million and half a billion worth of capital over the next five years and the Prime Minister has left it with nowhere to go."
The Victorian Government says it will still spend $600 million on school maintenance, even though it is not getting the money it expected from the Snowy Hydro sale.
Premier Steve Bracks says Victoria only agreed to the sale in the first place because of pressure from New South Wales and the Commonwealth.
He has told Southern Cross Radio that schools will still get their money, although it might take a bit longer.
"We will budget that just by using the existing cash position of the state which is strong and the balance sheet to just fund that normally," he said.
Investors react
Some of the nation's biggest investment banks are now pulling out of the strategies they had set up to sell the Snowy Hydro Scheme to investors.
The Macquarie Bank, UBS and Goldman Sachs JB Were were chosen in March to manage the initial public offer, with the float expected to raise up to $3 billion.
A director at EL & C Baillieu Stockbroking, Ivor Ries, says the decision to stop the sale would have come as a huge shock to the banks.
"Most of the investment banks behind this had prepared very elaborate marketing plans that were to begin in Hong Kong I believe yesterday," he said.
"They were planning to begin their global roadshow to sell this to institutions, institutional investors.
"Now they have to go around and cancel it so, egg on face for everyone really."
Mr Ries says investors will now also have less confidence about other Government sell-offs, including the rest of Telstra.
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