General

Energy Privatisation

Keep power in taxpayers hands

By Dr Patricia Ranald
AFTINET

Just before Christmas the NSW Iemma Government announced that it was planning to sell its electricity retail business and lease its power generating plants to private companies.

The leasing arrangement would transfer management and control of the assets and has the same impact as privatisation, despite government claims that the infrastructure would remain public.

This contradicts current Labor Party Policy and was not raised before the last election. Opinion polls show that 70% of people oppose electricity privatisation. The previous Carr Labor Government' privatisation proposal was defeated at a Labor Party conference in 1997. Liberal governments in Victoria and South Australia were defeated after privatisation raised prices and increased blackouts.

UnionsNSW has convened meetings of union members and begun a community campaign against the sell-off, which will soon include TV advertising to counter the government's advertising. The website at www.stoptheselloff.org.au has letters and petitions to the premier against the sale, as well the detailed submission to the NSW government from Professor Sharon Beder, an international expert on the power industry, which demolishes the government's arguments.

Privatisation will not increase government income

The Government claims that it will use the proceeds from the sales to fund health and environmental infrastructure. But the international evidence from shows that the income from privatisation is generally less than the revenue lost from selling the asset. Economist Professor Richard Blandy concluded that the South Australian electricity privatisation produced "no net benefit to state government finances." Economist Professor John Quiggan also confirmed that there was no net gain from privatisation from the Victorian government (quoted in the Beder Report, p. 8)

Privatisation will mean profits come before the environment
International research shows that private companies have to deliver high short term returns to shareholders. They can charge higher prices when there is a shortage of capacity, and therefore delay investment in new power capacity. They are driven to choose the least cost technology. Governments are not driven by short term profitability, and can plan to use emerging and renewable technologies that reduce greenhouse gas emissions (Beder Report, p 4).

Privatisation will further concentrate private control of a vital service in fewer more powerful hands and reduce government ability to regulate
The private companies that have lobbied for privatisation include those that already own generation and retail assets, and have a poor record of underinvestment, high prices and unreliable service provision in Victoria and South Australia (See below). It is madness for the NSW government to help consolidate vertically integrated private international monopolies. Because the US-Australia Free Trade Free Trade agreement did not exclude the private electricity industry, it will be impossible for governments to ensure any level of Australian ownership after privatisation. This was confirmed when the Federal government had to withdraw its provision for Australian ownership in the 2006 proposal to privatise the Snowy Mountains Hydro Electricity Scheme. That privatisation was defeated by community campaigning. Both the AUSFTA and the WTO Trade in Services Agreement (GATS) also restrict governments from having regulations in privatised industries that are "too burdensome" for business.

Privatisation will mean higher prices for an essential service

International research shows that prices increase after privatisation .The NSW government's own figures show that NSW electricity prices are 30% lower than South Australia's and 10% lower than Victoria's, as prices for both households and small business rose steeply in both states after privatisation (Beder Report p, 18).

Privatisation will mean more blackouts

International research from the US shows that private companies maximize profits by cutting staff, investment and maintenance, resulting in more power failures. Blackouts in Victoria increased by 32% in the four years after privatisation (1994-99).In South Australia in the summer peak period, blackouts have increased and some businesses find the cost of power so high that they can make more money by shutting down and selling the power they would have used (Beder Report, pp 18-19).

Take Action Now

Community campaigning defeated the privatisation of NSW electricity in 1997, and the privatisation of Snowy Mountains Hydro in 2006. Privatisation can be defeated again. Go to www.stoptheselloff.org.au to send a message to the Premier and get a petition to sign, and take to your family, friends and community group.

© 2001 Community & Public Sector Union - State Public Services Federation (CPSU-SPSF) - National Office

http://www.cpsu-spsf.asn.au/latest_news/general/20080117_privatise.html
Last Modified: 17 Jan 2008