Quite a few people saw what was coming, and some even tried
to do something about it. In 1994 independent anti-corruption
fighter John Hatton introduced a Private Member’s
Bill in the NSW Parliament – the Privatisation of Core
Government Services
Bill - "to give the people of New South Wales a say
as to whether they want the core services as defined by the bill
privatised, either in part – to the extent that it is
privatisation by stealth – or wholly’. The bill passed its
Second Reading on 22 September 1994 with the support of Bob
Carr’s Labor Opposition but it was then killed by the Liberals
under John Fahey. The Carr Labor Government that followed had an
absolute majority and went completely the other way.
John Quiggin said in 2001 of the South Australian electricity
privatisation experience "…the South Australian electricity
industry has reduced the net worth of the public sector … the
interest savings on the sale price will fall consistently short
of the earnings foregone through privatisation. This is
consistent with most Australian experience of privatisation”.
Isn't that exactly what’s likely to happen in NSW? Last year the
NSW Auditor General
reported that the combined profit after tax of NSW
electricity agencies was $1.2 billion compared to $847 million
in 2008/09. Pre-tax profits of the distributors also increased
substantially, from $661 million in 2008/09 to $965 million.
Pre-tax profits from generators increased from $307 million to
$465 million. Electricity entities’ distributions to the
Government were $1.4 billion, up $200 million from last year.
No wonder Roozendaal’s sale price resulted in the mass
resignation of directors!
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With that sort of return providing a source of funding for
maintaining and upgrading our energy supply systems, how can the
NSW Labor government and Eric Roozendaal explain the midnight
fire sale of our energy assets? We are all looking forward to
their explanations, but in the meantime, back to our history
lesson.
The official line: the Owen Report
On the back of the ERIG 2006 report, with its acknowledgment
that privatisation might be “politically sensitive”, in April
2007 the Iemma Government commissioned Curtin University
Professor Tony Owen to report on the need for new generation
capacity in NSW. The Greens, along with various environmental
groups, unions, and community groups, questioned the terms set
for the inquiry and its independence.
The Iemma government set up the Owen Inquiry on the premise
that the State would experience a shortfall of electricity
supply capacity and blackouts some time in the next ten years if
a new
baseload plant were not built. The government based their
prediction on a report prepared by the national electricity
market operator, NEMMCO, called the 'Statement of Opportunities'
(SOO), but the report in fact identified a relatively small
shortfall in
peak demand which it
said could be met by better managing energy use and making
businesses and homes more
energy efficient.
The Owen report then came out suggesting that a new baseload
plant – costed at $8 billion - needed to be up and running by
2014 if NSW was to avert an electricity generation crisis. We’d
also need another $4 billion to retrofit existing power stations
with carbon reduction technologies, and the retail businesses
would need up to $3 billion more to remain viable and compete
with their private sector rivals.
(As an aside, the current annual Statement of Opportunities
by the Australian Energy Market Operator now forecasts that NSW
will face shortages in 2016-17, well after the 2013-14 date put
forward by Professor Owen in 2007.)
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Sell-off spruikers in 2008 told us the State needed money to
deliver new roads and new public transport to reduce congestion,
more hospitals to improve the failing health network, and more
schools. Importantly it also needed the $15 billion for energy
reform to meet the demands in the next decades. Funnily enough
those needs weren’t mentioned by Eric Roozendaal in December
2010: he said the midnight fire-sale removed the need for
taxpayers to build new power stations, protected the State’s
Triple A credit rating and, despite not resulting in a new
energy retailer, ensured a more competitive retail market.
One might be forgiven for asking whether NSW retaining its
Moody’s AAA credit rating was contingent upon the sale of the
assets itself taking place, rather than on the money NSW derived
from the sale!
So where does all of this leave us?
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