New South Wales Government plans to sell off electricity poles and wires could worsen the state's budget position, a leading economist says.
Professor John Quiggin said the NSW Government was having a hard time selling the privatisation to voters, with polling showing they were overwhelming against the sell-off mainly because they feared it would increase their power bills.
"Opinion polls suggest stunning rates of opposition to privatisation, around 80 per cent," Professor Quiggin told 7.30.
His main criticism to the sell-off was not that he believed it would increase power prices, but that there were other bigger costs, like losing the $1.7 billion annual profit and the reduction in the net worth of the NSW public sector.
"The power bill argument is largely secondary," Professor Quiggin said.
"There really won't be much of an effect from either public or private ownership.
"The claim on the part of advocates of privatisation is that private sector efficiency will lead to bills being driven down, but of course in this case we're talking about the lease of a minority interest, so the management of the industry won't change, so there's no potential for private sector innovation to drive down costs.
"Because they're selling an income-generating asset and then spending the proceeds they will worsen the fiscal position and they almost certainly will be in a position where the budget problems become worse rather than better."
Professor John Quiggin said the NSW Government was having a hard time selling the privatisation to voters, with polling showing they were overwhelming against the sell-off mainly because they feared it would increase their power bills.
"Opinion polls suggest stunning rates of opposition to privatisation, around 80 per cent," Professor Quiggin told 7.30.
His main criticism to the sell-off was not that he believed it would increase power prices, but that there were other bigger costs, like losing the $1.7 billion annual profit and the reduction in the net worth of the NSW public sector.
"The power bill argument is largely secondary," Professor Quiggin said.
"There really won't be much of an effect from either public or private ownership.
"The claim on the part of advocates of privatisation is that private sector efficiency will lead to bills being driven down, but of course in this case we're talking about the lease of a minority interest, so the management of the industry won't change, so there's no potential for private sector innovation to drive down costs.
"Because they're selling an income-generating asset and then spending the proceeds they will worsen the fiscal position and they almost certainly will be in a position where the budget problems become worse rather than better."
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