Tuesday, June 17, 2008

Premier O’Farrell Sets The Agenda

Well, the deal has been done. Against the wishes of the people, the privatization of the electricity industry in New South Wales will go ahead. Despite the significant resistance offered by the union movement, and the community in general, it was always going to happen, one way or another. Ironically, it is Opposition Leader Barry O’Farrell who has been able to make it happen, and he’s not even the Premier… yet.

To get the deal done, the government has been forced to accept the demands of the opposition, the most significant of which are the assessment by the Auditor General and the rural impact statement, both prior to the sale. The Opposition insisted upon these conditions as an assurance that the taxpayers of New South Wales are getting the best possible value out of the sale. In reality the outcome of the Auditor General’s report will depend largely upon just what exactly are the terms of reference he is given. It is unlikely that his report will be allowed to result in a negative outcome.

As for the impact on rural areas, it’s not too hard to foresee that service guarantees will be required for the privatization to proceed. Those provisions have already been factored in to the government’s plan, and the impact assessment is unlikely to present any impediment.

In many respects, the pressure to privatize is so great it is remarkable that it hasn’t happened before now. Of course it has always been politically unpopular, but the reality is that a better deal would have been possible ten years ago than is the case now. If it had been blocked now, it would only get worse. Opponents of the plan might take some comfort from the knowledge that this is a minimalist privatization with distribution networks remaining in government hands, and generators being leased not sold.

The masterstroke for Barry O’Farrell and the opposition is that the privatization process which they see as necessary will go ahead, and the current Premier will take the blame from an unforgiving public.

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