NSW Treasury commercial projects

Scoping study into lotteries duty announced

The NSW Government will undertake a scoping study into its lotteries duty revenue stream.

As part of that scoping study, consideration will be given to monetising the revenue stream or diverting the revenue stream directly to the NSW Generations Fund.

Lotteries games in NSW such as Powerball and Oz Lotto are operated by Tabcorp Holdings Limited (Tabcorp) under a licence expiring in 2050. 

Under the terms of the licence, NSW collects an ongoing duty revenue stream that is related to player volumes, not to Tabcorp business performance.

In 2013 a scoping study into this opportunity was completed but a transaction was not progressed. The desire for stable infrastructure-like investment returns and the low interest rate environment mean market conditions are now favourable to reconsider this opportunity. 

The scoping study is a continuation of the government’s efforts to assess all opportunities to support infrastructure and in turn support jobs and the economy. 

WestConnex 49%

On 20 September 2021, the NSW Government announced the sale of its remaining 49% interest in WestConnex to Sydney Transport Partners (STP) for $11.1 billion in gross proceeds. This brings total proceeds from the sale of the motorway project to $20.4 billion, following STP’s earlier purchase of 51% in 2018.

Net proceeds from the sale have been deposited into the NSW Generations Fund (NGF), the state’s sovereign wealth fund. These funds will be used to repay an equivalent amount of debt over the next 2 years.

WestConnex is Australia’s largest toll road project. Once complete, it will allow motorists to drive more than 50 kilometres from Penrith to the city without stopping at a single traffic light. The final section is expected to open in late 2023, with the total construction cost estimated at $16.8 billion.

The sale supports the government’s long-term strategy to strengthen the state’s finances and invest in job-creating projects that help drive the COVID-19 economic recovery.

WestConnex 51%

On 31 August 2018, the NSW Government announced the sale of a 51% stake in Sydney Motorway Corporation (SMC) to Sydney Transport Partners.

The $9.26 billion in proceeds will help fund the final stage of WestConnex, the critical M4–M5 Link, which will connect 2 of Sydney’s busiest motorways.

The government first announced its plan to sell a majority share in SMC in May 2017.

The state established SMC to finance WestConnex, combining its own investment with funding from the commonwealth and private sector, supported by toll revenue.

This sale is part of the government’s strategy to strengthen the budget while delivering major infrastructure projects that create jobs and support economic growth.

On 11 May 2017, the NSW Government announced the long-term lease of 50.4% of Endeavour Energy to Advance Energy, delivering $7.624 billion in gross proceeds to the State.

Advance Energy is an Australian-led consortium made up of Macquarie Infrastructure and Real Assets (30.16%), AMP Capital on behalf of the Retail Employees Superannuation Trust (25%), Canada’s British Columbia Investment Management Corporation (25%) and the Qatar Investment Authority (19.84%).

The government retains a 49.6% interest in Endeavour Energy and continues to play an active role as lessor of the business.

Endeavour Energy supplies electricity to 2.5 million people across Greater Western Sydney, the Blue Mountains, Southern Highlands, Illawarra and the South Coast.

The NSW Government maintains ongoing influence as a joint investor, lessor, licensor, and as the safety and reliability regulator. The Australian Energy Regulator will continue to oversee network pricing.

In April 2017, the NSW Government entered a 35-year concession to lease the Land and Property Information (LPI) titling and registry division.

This followed the passing of the Land and Property Information NSW (Authorised Transaction) Act 2016 in September 2016. The legislation includes several safeguards to protect the integrity of the state’s property titling system.

The NSW Government continues to guarantee property titles through the Torrens Assurance Fund (TAF). The TAF compensates landowners for loss caused by fraud or errors in title registration and will continue to operate as usual throughout the concession.

Under the legislation, the government retains full ownership of all land title data, which must be stored in Australia.

A new independent regulator, the Office of the Registrar General, monitors the operator’s performance. This includes service levels, key performance indicators (KPIs), and data security.

For more information, read the Land and Property Information (LPI) fact sheet (PDF 134.4KB).

On 2 December 2016, the NSW Government announced the sale of Pillar Administration, one of Australia’s largest superannuation administration businesses, to Mercer (Australia) Pty Ltd for $35 million.

Mercer has committed to maintaining operations in the Illawarra region for at least 10 years.

The Superannuation Administration Corporation (Pillar) (Authorised Transaction) Act 2016, which enabled the sale, passed NSW Parliament in May 2016. A formal sales process began shortly after.

In October 2016, the NSW Government announced the long-term lease of 50.4% of Ausgrid to IFM Investors and AustralianSuper, an all-Australian consortium. The government retains a 49.6% interest in the assets and continues to act as the lessor of the business.

Ausgrid operates the largest electricity distribution network in the National Electricity Market, based on regulated asset value, customer numbers, electricity delivered and peak demand.

The transaction delivered $16.189 billion in gross proceeds to the state. These funds will help support major infrastructure projects through the government’s $20 billion Rebuilding NSW plan.

The state remains the licensor and the safety and reliability regulator for Ausgrid. The Australian Energy Regulator will continue to set network revenue.

The consortium has signed the Electricity Prices Guarantee, confirming that total network charges for the year ending 30 June 2019 will be lower than those for the year ending 30 June 2014.

In November 2015, NSW Premier Mike Baird and NSW Treasurer Gladys Berejiklian announced the successful lease of TransGrid to NSW Electricity Networks.

TransGrid owns and operates the high-voltage electricity transmission network in NSW and the ACT. It connects generators, distributors and major users. The network includes 99 bulk supply substations and more than 12,900 kilometres of high-voltage transmission lines and cables.

The transaction delivered $10.258 billion in gross proceeds to the state. These funds support infrastructure projects across NSW as part of the Government’s Rebuilding NSW plan.

NSW Electricity Networks is an Australian-led consortium made up of:

• Caisse de dépôt et placement du Québec (CDPQ), a Canadian pension fund.
• Hastings Fund Management, as manager of Utilities Trust of Australia.
• Tawreed Investments Limited, the global infrastructure arm of the Abu Dhabi Investment Authority.
• Wren House Infrastructure Management Limited, a subsidiary of the Kuwait Investment Authority.
• Spark Infrastructure, an ASX-listed infrastructure fund.

The NSW Government retains significant influence over TransGrid as the lessor, licensor, and safety and reliability regulator. It also continues to oversee planning. The Australian Energy Regulator will continue to set network charges.

On 19 February 2016, the NSW Government completed the transfer of the Home Care Service of NSW to Australian Unity following a competitive selection process.

This was a key milestone in the state’s rollout of the National Disability Insurance Scheme (NDIS).

Home Care supports older people and people with disability to live independently in their homes.

A major goal of the transfer was to choose a non-government provider that could ensure continuity of service and prepare Home Care for the national aged care reforms and the NDIS.

As part of the transfer, all clients and around 4,000 employees moved to Australian Unity.

The $100 million raised through the transaction is being reinvested in the disability sector to support the transition to the NDIS.

The NSW Government began the Electricity Generation Transactions in late 2012. These transactions delivered over $2 billion in gross proceeds and reduced State debt by $1.2 billion.

By completing these transactions — including ending the Cobbora coal supply agreements, the state avoided around $2 billion in liabilities and removed its exposure to fluctuations in the wholesale electricity market.

More than $860 million from the proceeds was paid into the Restart NSW Fund to support priority infrastructure projects across the state.

The transactions were completed in stages and included the sale of:

• The GenTrader assets of Eraring Energy (Eraring and Shoalhaven power stations) to Origin Energy, and Delta West (Mount Piper and Wallerawang power stations) to EnergyAustralia, for a combined $210 million.
• Green State Power’s renewable energy assets to Trustpower for $72 million.
• Macquarie Generation’s assets (Bayswater and Liddell power stations) to AGL Energy for $1.505 billion.
• Delta Electricity’s gas-fired Colongra power station to Snowy Hydro Ltd for $234 million.
• Delta Electricity’s Vales Point power station to a joint venture led by Sunset Power International for $1 million.
• Brown Mountain Power Station to Cochrane Dam Pty Ltd for $4.5 million.

As part of the Eraring Energy transaction, the state received a $300 million settlement to end the Cobbora coal supply agreements. This avoided a $1.5 billion liability to develop and operate the mine, the largest of the $2 billion in liabilities the state avoided through the Energy Generation Transactions.

On 30 May 2014, the NSW Government finalised the long-term lease of the Port of Newcastle, generating $1.75 billion in gross proceeds.

The successful bidder was Port of Newcastle Investments, a partnership with equal ownership by Hastings Funds Management and China Merchants Group.

The 98-year lease includes:

• lease of the port land owned by the state
• rights to use, maintain and charge users for the commercial use of the shipping channel
• commercial control of shipping schedules (subject to safety and regulatory oversight by the Harbour Master).

The government retains freehold ownership of the land and remains responsible for pilotage services, Harbour Master functions, port safety licensing, dangerous goods approvals, emergency response, and the administration of coal chain Capacity Framework Arrangements.

Some employees from Newcastle Port Corporation transferred to the private lessee to support ongoing operations. These staff received the same protections and entitlements as employees transferred from Sydney Ports Corporation and Port Kembla Port Corporation.

The lease preserves public access at the port. Existing regulatory oversight, including environmental protections and price monitoring, remains in place.

The lease released capital to strengthen the state’s credit position and support economic growth by improving access to global capital and infrastructure expertise.

The transaction highlighted investor confidence in NSW’s infrastructure and continued the Government’s successful strategy of recycling mature State-owned assets to fund new infrastructure.

Port Botany is Australia’s second busiest container port, serving the nation’s largest population centre. Port Kembla is Australia’s largest vehicle import hub and a major export point for coal and other bulk goods.

In April 2013, after a 6-month competitive bidding process, the NSW Government awarded a 99-year lease of Port Botany and Port Kembla to the NSW Ports Consortium.

The consortium includes:

• Industry Funds Management (IFM), an Australian infrastructure investor owned by Industry Super Holdings Pty Ltd, which is backed by many Australian superannuation funds
• AustralianSuper, an Australian super fund
• Tawreed Investments Limited, the global infrastructure investment arm of the Abu Dhabi Investment Authority.

The transaction delivered a strong financial return for the state, with over $4.31 billion from the Port Botany lease and $760 million from the Port Kembla lease.

Net proceeds were invested in the government’s infrastructure fund, Restart NSW, with $100 million dedicated to projects in the Illawarra region.

The government retains oversight of key port matters, including a price monitoring regime to ensure transparency, similar to arrangements at other major Australian ports.

The Port Authority of NSW continues to manage security and emergency response functions.