Snowy 2.0 legal cost avalanche – more public money spent hushing more public information

The government has admitted to the Senate that it spent $600,000 on lawyers to prevent early warning signs of the cost of Snowy 2.0 and program blasts from being made public. Transparency Warrior Rex Patrick reports.

Explosion in Slow Motion

Snowy 2.0 was announced in March 2017. At the time, the estimated cost of the project was $2 billion and completion time was four years; So it will be operational in 2021.

The price tag was disingenuous from the start because at the time of the announcement Snowy Hydro was jointly owned by the Commonwealth, NSW and Victoria. On 29 June 2018, the Federal Government paid $4.154 billion and $2.077 billion respectively to NSW and Victoria to acquire their stake.

In February 2019, the Government announced it was doubling the price of Snowy to $2.0 billion (with the taxpayer injecting $1.38 billion) and moved the completion date to 2024. Six weeks later a major $5.1 billion construction contract was signed (another $500 million increase in price).

A “reset” occurred in August 2023, with the project cost doubling to $12 billion, along with a $2.6 billion taxpayer equity injection and a $4.5 billion loan.

But the story gets even worse.

There Are Warning Signs

MMW wrote extensively about Snowy 2.0 and warned readers of pending eruptions. 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 of the project would reach $25 billion.

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This article came two months before Snowy Hydro publicly acknowledged this. 12 billion dollars was not enoughand three months before it was revealed that CEO Dennis Barnes was receiving a $322,504 annual bonus despite the new cost increase.

What’s even better than Ted Woodley’s astute observations is that Snowy Hydro is required to submit an ‘earned value’ project management report to its shareholders (Minister of Energy and Minister of Finance) every month. This report provides a real-time indication of whether the project is on time and on budget.

Therefore, in April 2023 (before the reset) MWM requested access to the (then) latest project reports. It was access denial, denial, denial. This led to proceedings in the Administrative Review Tribunal, where the author fought for access against two sets of lawyers (the Government’s and Snowy’s) and two sets of lawyers, which unfortunately ended in a loss.

The matter is currently under appeal in the Federal Court.

Legal cost avalanche

After taking the reins of Snowy Hydro in February 2023, Barnes committed the company to greater transparency. “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,” he wrote in his 2022/23 annual report.

He must have changed his mind sometime before April 2024, when he voluntarily attended Snowy Hydro’s Administrative Review Tribunal hearings. Thanks to Senator Jacqui Lambie, we now know that Barnes and the Government spent $507,506 on Administrative Appeals Tribunal hearings.

To be more specific, that’s $507,000 of taxpayers’ money; because all the money Snowy Hydro spends on legal fees is taken from dividend returns to the Government.

We know from previous answers that the costs for the Commonwealth’s attorney (Australian Government Solicitor) were under $100k, which means the costs for Snowy Hydro’s attorneys (King & Wood Mallesons) were around $400k. Same legal battle, very different legal costs for both groups of lawyers. Perhaps this gives us a clue as to why Snowy 2.0 went so far over budget.

More costs to come, shame

The Federal Court accepted that the second round of the legal challenge was a matter of public interest. When the author applied for a protective costs order to avoid losing his home in pursuit of transparency promised by Barnes, the Government and Snowy Hydro opposed the order.

They lost (embarrassingly against a self-represented plaintiff) with the court restricting any future adverse costs award to the author at $40k. This loss cost the Government and Snowy Hydro (i.e. the Taxpayer) jointly $88k.

If Administrative Appeals Court proceedings are taken into account, they will spend another $500,000 trying to keep project implosion indicators top secret.

A million dollars to keep the public from seeing whether the costs on this taxpayer-funded project will continue to race towards the black hole like an overloaded sled at Perisher.

And in the background we see Prime Minister Anthony Albanese complaining that the costs of processing Freedom of Information requests are skyrocketing. But the reality is that rather than standing on the high ground of Transparency Mountain, he is treading the low road amid an avalanche of FOI costs of his government’s own making.

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Rex Patrick is a former South Australian Senator and formerly a submariner in the armed forces. Known as an anti-corruption and transparency warrior, Rex is also known as “Transparency Warrior“