Power Play

EDITORIAL FRIDAY 22.08.08.
The report by the New South Wales Auditor General finding “no significant issue” with the Government’s plans to privatize the electricity industry has been welcomed by the Premier as a green light to proceed. But that is not exactly true. As the Auditor General himself, Peter Archterstraat, told me, his report is neither a green light nor a red light. That decision is for Parliament alone.

It is important to remember that the Auditor General is only able to address the brief he is given, and in this case he was not asked “Is privatization in the best interests of New South Wales?” He wasn’t asked to compare privatizing and not privatizing the industry. He most certainly wasn’t asked to make any kind of assessment of the benefits or otherwise of retaining public ownership. The only thing he was asked to consider was if the proposed process was appropriate. In other words, there was no question of whether it would proceed, only how and when.

However, even with that very limited brief, the Auditor General has managed to come up with some sticky issues for the government, and for that matter the opposition, who must now decide which way they will swing. The report has two main recommendations: one is to allow the sale of both retailers and generators to be packaged, and the other is to set a minimum sale price.

It is this question of a minimum price which really contains the greatest uncertainties. Mr. Archterstraat has pointed out that as long as we don’t know the details of the Federal Government’s proposed Emissions Trading Scheme it is impossible for anyone, buyer or seller, to set a price. But even more alarmingly, the report shows that the Treasury has not worked out the costs and benefits of retaining public ownership. Without that as a benchmark, how can the government possibly know how much it has to realize in a sale in order to break even or come out in front?

In other words, it looks very much like the Government doesn’t care what price it sells for, just so long as it sells.Yet despite this, the Premier insists that privatization is in the best interests of the state and the people of New South Wales. No wonder so many people feel that the whole deal is dodgy.