The Big Sell Off: Electricity Privatisation

By Kellie Tranter

11 January 2008

If the Iemma Government wanted a mandate from the voters of New South Wales to privatise electricity one would expect that a statement of its intention would be found in the NSW State Plan that the Government trumpeted as its vision for the future before the March 2007 State election http://www.nsw.gov.au/ stateplan/. I haven't been able to find any reference to the Government's intention in the State Plan, which seems to be a strange omission given the significance of privatisation both as policy action and personally for all electricity consumers. Were they afraid of the likely public reaction?

Government advertisements are now flooding the media in support of Mr Costa's statements that privatisation will benefit us all and will not involve a net detriment to electricity consumers. When Governments have to waste our taxes to try to reassure the public about their policies the alarm bells should start ringing. We need to look at the realities of privatisation rather than the puffery.

The promises the State Government are making fly in the face of what has happened when electricity has been privatised both in other States of Australia and in other countries. http://www.uow.edu.au/arts/sts/sbeder/ theives.html

Closest to home, the failure of privatisation in South Australia in particular is detailed in John Spoehr's book Power Politics which was published in 2003. http://evatt.org.au/publications/papers/ 83.html. Spoehr pointed out that "....one of the perverse consequences of privatisation of the Electricity Trust of South Australia is that the contract with new private power operators may prevent the Government from introducing price caps. The only strategy for price control being seriously canvassed...has been "price justification"...(which)...is "paper tiger" public policy, reflecting just how impotent the State Government has become in the Electricity Market." One would hope the NSW Government has learned from bad experiences in other States, but the information available so far doesn't give much reassurance.

Privatisation overseas has also had bad outcomes, not least being cases of mass disconnection of consumers. http://news.bbc.co.uk/1/hi/business/ 3109154.stm

In announcing its proposed privatisation plans the Government seems at first blush to have forgotten the swell of public opinion that rose to circumvent the sell off of the Snowy Mountains Hydro-Electric Scheme. On the other hand, the advertising blitz suggests that the Government is aware that the voters of New South Wales are likely to react the same way to electricity privatisation and is trying to head off at the pass any similar public protest.

Presumably the decision to privatise has not been taken lightly or at the drop of a hat. If the decision wasn't made overnight and has been properly considered the Government would have been well aware of what it intended to when it formulated its State Plan. If so, why did the Government not have sufficient confidence in the people of New South Wales agreeing with it to incorporate it in the State Plan and permit its merits to be debated as an election issue.

The bitter experience of electricity consumers in other States and other countries--and in particular the poor and underprivileged--suggests that privatisation is an issue on which politicians should follow the wishes of the people rather than dictate to them.

At this stage the only real opposition to the sell off seems to be gathering in the union movement. http://www.abc.net.au/news/stories/2007/12/12/ 2116448.htm .Although the motives of the unions involved might be open to question because of the very direct effects privatisation will have on their members, opposition to privatisation seems to be far more widespread in the community than support for it. http://www.smh.com.au/news/national/majority-oppose-power-selloff/2007/12/18/ 1197740273381.html. Rather than making their voice heard through industrial action which will cause widespread disruption and inconvenience, perhaps the unions would be better off focusing on marshalling and giving voice to the community opposition that already exists.

The problem of course is that another election is a long way off. Governments tend to introduce policies like these early in their term to avoid public opposition being voiced in the ballot box. But perhaps the unions could look at the possibility of using some of Mr Howard's legislation --the Commonwealth Electoral Amendment (Democractic Plebiscites) Act 2007 -- to secure the assistance of the AEC in putting electricity privatisation to a vote by the people. http://www.onlineopinion.com.au/view.asp? article=6343. The Government's ads betray its knowledge that popular opinion is against it on this issue and a plebiscite under the aegis of the AEC would really show where people stand.

The now old argument that the money gained by the selling off of public assets and avoiding infrastructure costs can be used to meet funding shortfalls in areas like health or education is merely an admission by Government that it is incapable of long term planning. It was the catch cry of Thatcherism and Reaganomics, of the neo-liberal approach that has come to be recognised as a feast by corporate privateers on public assets. Our Government is selling our assets to generate income instead of maintaining those assets by planned public investment to give citizens access to essential goods and services at a cost that isn't padded by the returns extracted by the corporate privateers. Instead of planning to maintain infrastructure at long term sustainable levels, the approach is to try to pass responsibility to the private sector; the reality has proven to be that private operators can't balance private profits with public needs, they let infrastructure run down and ultimately dump the burden back onto the taxpayer at the end of their long term "lease", if not before.

And finally, given the recent fiascos with privately funded motorways and Telstra, is the Government prepared to make public all of the details of the proposal, including all of the contractual documents, so that we can all see exactly how the government will guarantee that consumers will be protected and that the privateers will perform? Has the Government bothered to examine all viable alternatives to electricity privatisation http://www.apo.org.au/linkboard/results.chtml?filename_num =187725?

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