At this weekend’s NSW ALP Conference, Premier Morris Iemma demonstrated three reasons why he can’t be trusted with the State’s electricity assets.
Firstly, he lacks the courage of his convictions. Secondly, everyone who stood by Iemma looks like a goose today. Thirdly, it’s the sweeteners that will kill this deal and cramp the reform of NSW’s electricity system for years into the future.
It is standard practice within the ALP that politicians who vote contrary to a caucus resolution to lose the Party’s endorsement. Before the weekend, an email to Labor MPs from NSW ALP President Bernie Riordan – to the effect that those who chose to vote to retain public ownership of electricity assets need not fear loss of their preselection – was leaked to the press. The weekend’s vote of 107 in favour of privatisation, 702 against, means that the tables are now turned: those Labor MPs who stand by their Premier and vote for privatisation could find themselves like turkeys voting for Christmas.
The behaviour of Michael Costa, the strongest proponent of privatisation, did not help. He shook his fist at delegates and baited hecklers, leading Bernie Riordan to complain that Costa deliberately wanted the ALP to look like a rabble. Any Labor MP who supports electricity privatisation now looks reckless, and the dupe of a maniac.
Iemma said on the weekend that the money from the sale and lease would go to schools, hospitals and public transport. These facilities always need extra money, but Iemma set delegates up for disappointment. Public assets never return as much as they promise (the State Bank of NSW was sold for one third of the amount its purchaser valued it at), and an uncertain economic environment – in which previously strong companies find themselves on the ropes or scrambling to avoid capital shortfall – does not promise a strong return for assets.
What’s more, NSW’s electricity infrastructure needs investment, meaning that any purchaser will not only have to pay for assets valued more highly than their condition would warrant, but will also have to reinvest in newer, more efficient and environmentally sustainable equipment. This double price has not been considered by privatisation spruikers, but those approached to buy the assets know it full well and baulk at the prospect.
If there was a keen purchaser out there, you can bet that Iemma and Costa would have wheeled them out by now. In the same way that supporters of the Howard Government’s WorkChoices legislation failed to put their money where Howard’s mouth was, so too supporters of electricity privatisation are waiting for the sweeteners before they will go anywhere near PowerChoices.
NSW ALP Secretary Karl Bitar and Assistant Secretary Luke Foley, from the Party’s Right and Left respectively, thought they pulled off a coup in deferring a final decision for 72 hours to save face for Iemma and Costa. In doing so, they have put too high a price on these two individuals and too low a price on the Conference resolving issues in a manner befitting a democratic party.
And so Iemma and Costa plough on, their supporters embarrassed and diminished and their opponents encouraged and strengthened. NSW, meanwhile, faces a looming power supply crunch that no new technology – not solar, not "clean coal" nor even the Faustian bargain of nuclear power – can realistically avert.
NSW needs an electricity supply that provides maximum output for minimum input and distribution loss, and doesn’t ravage its environment. For the NSW Government, the only solace is that the Opposition has no answers either; but people knew that already, and nobody’s better off for it.
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