Wednesday, March 26, 2008

Power To The People

It appears that a majority of the New South Wales public is opposed to the privatization of the electricity industry. But is the public well informed? The campaign mounted by Unions NSW has been very successful at spreading its anti-privatisation message. The unions claim that privatization will lead to job losses, price increases, and a decline in customer service.

Now, these are all legitimate issues which deserve to be addressed. But the question is what evidence is there to suggest that the private sector would be any worse than the government at managing our utilities. The Australian Industry Group and other business bodies have banded together to form a new alliance to promote the positives of privatization, and to counter the unions’ campaign. It is the Alliance’s contention that privatization is not only desirable, but it is the only sustainable way forward.

There’s a number of reasons for this. First, the government is not lying when it says it doesn’t have the money to build new capacity. Of course the reason why it doesn’t have the money is because rather than reinvesting the profits from electricity into maintenance and infrastructure, it has taken out enormous cash dividends to boost consolidated revenue. Secondly, while it is true that private enterprise must build in a profit margin, that doesn’t necessarily mean that the price of power will go up. The government already takes a profit out of the power industry as I just mentioned. The fact is that the price will go up anyway because of the effects of whatever carbon trading scheme is eventually introduced to combat global warming.

Thirdly, it’s debatable as to whether or not the level of customer service delivered under present arrangements is satisfactory. Which brings us to the point.

Despite the fact that there remains genuine widespread distrust of the privatization plan, I have to wonder if it’s at least in part a case of “better the devil you know”. After all, given the track record of the New South Wales government on hospitals, schools, and transport, it’s amazing that we would trust them to run a chook raffle, let alone the electricity industry.

Despite that, there will always be some who believe that electricity, like roads and other essential services to the community, should remain the domain of government, even if it’s not always efficient.

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