Groundhog day: electricity privatisation

Premier Mike Baird has announced a proposal to sell 49 per cent of the NSW electricity network, to be taken to the next state election.

The announcement comes in the wake a comprehensive report by Professor John Quiggin earlier this year, Electricity privatisation in Australia: a record of failure, which found that the market-based reform process that has occurred in Australia's energy sector since the 1990s has been a failure.

Real electricity prices in Australia fell markedly from the 1950s to the mid-1990s to be among the lowest in the world. Since the mid-1990s, privatisation, corporatisation and the creation of competitive electricity markets were supposed to give consumers lower prices and more choice, promote efficiency and reliability and drive better investment decisions. After 20 years, the evidence is that none of these supposed improvements have occurred.

  • Prices have reversed their declining tend, and are the highest in privatised states;

  • Customer dissatisfaction has jumped, with complaints to the energy ombudsman in privatised states leaping from 500 per annum to 50,000 p.a.

  • reliability has declined across a wide range of measures;

  • promised investment efficiency has not occurred;

  • resources have been diverted away from operational functions to management and marketing, leading to higher costs and poorer services;

  • real labour productivity has fallen, as employment and training of tradespeople have been gutted and the numbers of less productive managerial and sales staff has exploded;

  • the high rates of return to private owners for the low investment risk is unjustifiable and irresponsible;

  • the consumers in privatised states must bear the cost of approximately 10 per cent p.a. interest on private owners' debt, compared with the substantially lower government borrowing costs of 3 per cent p.a. 

Privatisation has figured in numerous Australian elections, invariably with catastrophic results for its supporters, including 

  • the 1999 NSW election, when the Liberal opposition proposed the privatisation of the industry as its main election promise and won only 33 per cent of the vote and lost 13 of its 46 seats;
  • the 2002 SA election following the privatisation of the state's electricity industry that resulted in the Liberals losing office, which they have yet to regain;
  • the 2010 NSW election in the wake of the privatisation of some electricity assets by the Keneally Labor government and a no further privatisation promise by the O'Farrell LNP opposition, which led to Labor losing 32 of its 52 seats;
  • the 2012 Queensland election, when the otherwise fairly highly regarded Bligh Labor government undertook a privatisation program in defiance of its own 2009 election commitments, which resulted in Labor losing all but seven seats in the 89-seat parliament.

Having lost its former leader, Barry O'Farrell, as a consequence of his evidence before the Independent Commission Against Corruption, the apparently policy-bankrupt NSW Liberal-National Party government now seems bent on political suicide. Last month, a poll of 2892 voters in four key regional electorates revealed overwhelming opposition to privatisation, finding that just 14 per cent of voters supported selling off the state-owned electricity poles and wires network. Some 70.3 per cent of voters are opposed. 


Visit the Stop the Sell Off campaign website.