Wednesday, December 15, 2010

So Much For Democracy.

After a saga stretching over many years, beginning with the failed proposals of Premier Bob Carr, through the political demise of Premier Morris Iemma and the subsequent revolving door on the Premier’s office, the New South Wales Government has finally sold off its interests in the electricity sector. Sort of. The energy retailers along with some of the generating trading rights have been sold off to Origin Energy and TRUenergy, while negotiations to sell the remaining gen-traders are expected to be completed in the reasonably near future. That means the state still owns the actually generators even though the private sector will be buying and selling the power that they generate, and the state also continues to own the poles and wires. In the end, it is a deal which seems to have satisfied no-one but the government and presumably the purchasers.

Opponents, including the state opposition parties, the unions, some industry analysts, consumer groups, and a fair chunk of the general population fear that the assets have been sold too cheaply at a poor time when the market confronts significant uncertainty, and that the result will be higher prices for consumers. While it’s tempting to suggest that since the government has been such a colossal failure at managing the sector that things can only get better now that private enterprise is about to step in, that simply isn’t the case. One of the reasons the government has been so keen to unload the business has been the need for massive new investment to renew the infrastructure. However, the structure of this deal still leaves the bulk of the physical infrastructure in government hands, while somebody else makes money out of it.

It also means that private operators driven by the profit imperative have the motivation to (a) increase prices, (b) reduce service standards to cut costs, and (c) cut jobs for the same reason. It means that consumers will have to put up with more desperate sales people knocking on the door in the early evening trying to sign them up to change providers, whether they want to or not. And it means that the New South Wales government will pocket about $5.3 billion, which sounds good until you compare it with the $20 billion which was bandied about a few years ago, or even the $10 billion suggested while Nathan Rees was Premier. Of course, it’s possible that the government might actually do something useful with that $5.3 billion, but judging by past performance I wouldn’t count on it.

In fact , when you consider the extraordinary amounts of money wasted on things like the Sydney Metro debacle, profligate waste of the federal funds for the B. E. R. schools program, and just about everything else the New South Wales government has done, I’d be surprised if we ever see a penny of that money put into anything that actually amounts to anything. But the sad reality is that for the significant number of people who believe that public utilities should rightly remain publicly owned assets, there is no longer any political party which will support that view.

So much for democracy.

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