Friday, August 22, 2008

Power Play

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.

Thursday, August 21, 2008

Efficiency Dividends Aren’t and Economic Rationalism Isn’t

Although we could all probably learn to live without television, we have come to expect that we can be entertained or informed by the box whenever we want. For some Australians in regional areas there seems to be the risk that this might not be the case when analog TV is turned off in 2013. Digital television offers many advantages over analog, but only if you can actually pick up the signal.

The Australian Communications and Media Authority was given the job to conduct field testing to identify blackspots around the country. That testing has been cut short over technical concerns, and now looks unlikely to be completed. Why? Budget cuts. The Authority has been required to achieve what is known as an “efficiency dividend”, but in plain English that translates to a cut of $4.6 million.

The problem with efficiency dividends, aside from the fact that the phrase itself is a fine example of Orwellian doublespeak, is that they are targets set according only to financial outcomes, not service outcomes. In other words, it’s as if Mum and Dad decided to set the grocery budget at $50 instead of $100, and then were shocked to discover that they had no meat to eat, their children became sick, and one of them dies of malnutrition.

Of course it is important to be financially prudent. But the blight of “economic rationalism”, another brilliant piece of Orwellian language which refers to bottom line thinking and which is neither economic nor rational, has undermined our ability to deliver services that actually meet community expectations, especially in regional areas. This applies to both government and private sector activity.

Of course, it’s only television. We can all live without it if we have to. Isn’t just as well this cost cutting business doesn’t affect really important services…

Wednesday, August 20, 2008

Forum Fudges Facts

The Federal opposition leader has convened his own youth binge drinking forum, gathering together interested parties from across the spectrum. On the face of it that would appear to be a good idea. It would appear to provide the opportunity for some informed debate about the extent of the challenge and the various possible methods of addressing it. Like the increased tax on alcopop drinks. In fact, it was nothing of the sort.

From the outset, Brendan Nelson, yes he is still the Liberal leader (for now), made it clear that he had already made his mind up on the matter of the increased tax. This must have pleased the industry representatives who were participating because it completely removed any need for them to substantiate their claims that the tax has missed the mark.

Further to that, Dr Nelson apparently claimed that the problem of alcohol abuse is “overstated to some extent by various sections of the media and some people in public life.” In other words, he does not believe the whole issue is actually such a big problem. Is it possible that the whole exercise was put together so that Brendan Nelson could state his position to the participants and attempt to justify it?

In fact the forum has been labeled by some as nothing more than a stunt, and it’s difficult to escape that conclusion. Far from being an opportunity for discussion or debate, it seems to have been nothing more that an effort to validate the already announced position that the opposition will oppose the tax increase.

The truth is that in opposition Brendan Nelson is not in a position to implement any policy. The only thing he can do is block policy. Now that he has decided to block many of the government’s budget measures he needs to justify his position. The irony is that failing to conduct a legitimate debate achieves the opposite.

Tuesday, August 19, 2008

Plenty Of Style, Where’s The Substance?

There is an increasing perception that the new Federal Government is big on talk, and not so big on results. It could be said that the big ticket items which have so far been addressed by the Government are the largely symbolic ones. You know, the ratification of the Kyoto Protocol, the formal apology to the stolen generation, and the 2020 Summit. Other more concrete matters have been less spectacular.

The Government has been criticized for dealing with issues by setting up committees and inquiries. The suggestion is that rather than making decisions, the Government is sidestepping issues. Of course the one big item which could not be avoided was the Federal Budget for the simple reason that it must be delivered according to a deadline. But even that has been received as a rather tame document, with its only contentious provisions now under doubt because of a lack of numbers in the Senate.

Fuelwatch hasn’t even got off the ground, and already it appears to have been killed off. Grocery Choice has been labeled useless in the fight against rising grocery prices. And now Treasurer Wayne Swan’s plan to help disgruntled customers switch banks has come under fire as being inadequate in providing any real benefit. All these programs at least gave the impression that the Government was DOING SOMETHING. Unfortunately, that impression has been replaced to some extent by the impression that the Government is doing nothing which is EFFECTIVE.

Now, that’s not entirely fair since there have been significant steps forward in relation to Federal - State cooperation in a range of areas. One of them is in consumer protection law, where the Government now has an opportunity to ACTUALLY DO SOMETHING about the unfair contracts which are imposed not only by banks, but by a whole host of service providers.

Whether this Government will fall into the same trap as some of their State counterparts and allow themselves to become more reliant on spin than substance remains to be seen. But many already suspect that this is the case. At the moment, while the opposition is still in disarray, the Government continues to score free runs. But that won’t last forever.

Monday, August 18, 2008

Customer Contracts Can Be A One Way Street

The various states and territories of Australia have reached an in principle agreement to introduce uniform consumer protection laws across the nation. At present, each state and territory has its own structure, as well as the Commonwealth provisions under company law. It’ a lot of red tape for businesses to contend with, but also a lot for consumers to understand when their rights might vary from state to state. Putting all the jurisdictions onto an equal footing will obviously achieve a more efficient system. But there is more to the discussion than simply uniformity.

Also on the agenda is the question of unfair contract conditions imposed upon captive consumers who must sign a document in order to obtain the service they wish to buy. Once upon a time the only contract we would sign would be a mortgage with our bank. Now we must sign on the dotted line for a phone service, the internet, our electricity, gym memberships, and more. Pretty soon you’ll need a contract to go shopping at your local supermarket.

The problem with all of these contracts is that some of them contain clauses which are inherently unfair, such as the ability of a service provider to unilaterally alter the terms and conditions at any time. Or the requirement for fees or charges to be paid should the customer have the temerity to want to make a change of some sort. Or a clause which removes liability for any interruption to service. In many cases these contracts were introduced as a way of retaining customers and providing some security of income. There’s nothing wrong with that, but it would appear that the opportunity has been taken to draw up contracts which are essentially a one way street.

In my view, any contract which includes a clause which allows the service provider to unilaterally change the terms and conditions at any time isn’t really a contract. As a customer, you have no recourse if you believe you have been treated unfairly.
Even more alarming is the fact that most mortgages contain exactly that clause. When you sign up you might accept that you are committing to a variable rate of interest, but deep in the fine print there can also be the clause which allows the bank to change any terms and conditions it likes at its own discretion.

There’s a lot more to this reform of consumer protection than just cutting red tape. It is also an opportunity to give all of us as consumers the right to a fair go.