No to Power sell-off!

Letter to Sydney Morning Herald 27 August 2008
When you start with a desired result and write backwards

The report by the Auditor-General on the privatisation of the electricity supply industry is a classic case of a government writing the desired result into the terms of reference ("O'Farrell in barrel of trouble with business", August 26).

One of its key findings is that "nothing has come to my attention that causes me to believe that the Government's strategy for the transfer of assets to the private sector as set out in the strategy document supplied by the Treasurer is not appropriate for maximising financial value for taxpayers".

With due respect to the Auditor-General, this observation has the capacity to mislead. NSW residents pay taxes to the Federal Government, and nothing in the proposed sale of electricity assets will do anything to lighten their tax burden. What the sale will do is fatten up the coffers of the State Government. Whether this is to the benefit of NSW residents will depend on whether the money is spent wisely or merely for electoral advantage.

The question that should have been asked of the Auditor-General is whether the proposed sale will be in the best interests of NSW electricity consumers. A substantial part of the assets to be sold has been paid for by "internally generated" funds, that is, funds provided by present and past electricity consumers. There is precious little of value in the Government's strategy to protect electricity consumers' collective equity in those assets.

A superficial reading of the Auditor-General's report may lead some to believe he has found the change will be to consumers' advantage but this is not so. As he states: "I am not commenting on the merits of transferring electricity assets to the private sector. My role is to review the strategy document that has been developed to give effect to any such transfer."

On careful reading, it will be seen that he was simply asked whether the Government's proposed method of selling the assets would generate the maximum income - in general he is satisfied that it will. He has not said that privatisation in itself is a good thing for electricity consumers.

History is not on their side. When the Victorian electricity industry was privatised, tariffs in Victoria were in line with those in NSW.

After the sale and the expiry of transitional arrangements, the relative cost of power in Victoria rose significantly. The story in South Australia is similar.

NSW and Queensland, which have not privatised, are the low-cost mainland suppliers. This is the key issue that the Government and Opposition need to address in this critical week.

Frank Brady