It’s time to return to matters of state – in this case, Macquarie Bank and its relationship with the Hydro and the Basslink project…

At last week’s Estimates Committee hearing, questioning by the Liberal Party’s Will Hodgman and the Greens’ Nick McKim revealed just how embedded into the Hydro these days is the bank sometimes called “the millionaires’ factory”…

It’s a complex financial world we’re dealing with here, but what I’m about to describe ought to be a matter of real concern to the owners of the Hydro, the Tasmanian people.

According to evidence given by the Hydro last week to the Estimates Committee, Macquarie Bank provided advice to the Hydro during the Basslink tender process. Macquarie Bank is also what’s called the counter-party to the Hydro’s interest rate risk mitigation strategy, at this stage valued at $245 million over 25 years.

And how did Macquarie get this job? The Hydro’s CEO, Geoff Willis, told the Estimates Committee Macquarie advised the Hydro that “exposures existed and then Macquarie Bank stepped aside. Hydro Tasmania’s board selected Macquarie Bank to undertake the transaction.” All without a tender process, because the Hydro said the transaction was so market-sensitive.

Even more disturbingly, the Hydro doesn’t know what fee Macquarie got from the transaction. Fraser reckons it to be around $40 million. Price Waterhouse Coopers said the transaction was reasonable, but no figure was put before the Hydro Board.

This Macquarie-Hydro deal looks, on the face of it, unsatisfactory. Macquarie tells the Hydro it needs some interest rate protection, then it steps aside and, surprise, surprise, Macquarie gets the job and

pockets a tidy fee. If this was a private company, I think shareholders would be rightly disturbed.

As they might also be disturbed by the refusal of the Hydro to tell the Tasmanian people each year whether or not Basslink is profitable…

Tasmanians deserve better from their biggest government business. That Macquarie Bank can win a lucrative deal without any competitive tender, and that Basslink’s bottom line cannot be revealed, shows that the Hydro board needs to lift its game.