Iemma and Costa dumped — now dump power sell-off!

September 6, 2008

The overwhelming public opposition to electricity privatisation in NSW has claimed the political scalps of former premier Morris Iemma, hated treasurer Michael Costa and deputy premier John Watkins.

The NSW Right caucus (Centre Unity), for decades the overlords of NSW Labor politics, has also been torn apart by the issue, opening the way for the Labor "Left" to fill the positions of premier (former emergency services minister Nathan Rees) and deputy premier (former education minister Carmel Tebbutt). However, despite owing his premiership to public hatred of power privatisation Rees told the ABC's Stateline on September 5 that "the retail sale will proceed".

Early on September 5, Iemma walked into the Right caucus meeting with a cabinet reshuffle plan to dump Costa, and demote gaming and racing minister Graham West and health minister Reba Meagher. The caucus, outraged at the idea of removing such ministerial plums from its plate, baulked at the plan, forcing Iemma to fall on his sword and resign.

Earlier that day, Costa gave a media conference at which he bagged the government for its decision to build a $12 billion rail line in Sydney's north-west, and explained the depth of NSW's financial problems and why he was still the best man to solve them. But no-one was listening.

Earlier that week, Watkins resigned, explaining that he was "physically and emotionally exhausted" (Watkins' yelling matches with Costa in cabinet were legendary).

The demise of the Costa-Iemma administration was triggered by its August 28 decision to implement its "Plan B" for privatising NSW's three electricity retailers. Faction leaders, MPs and party administrators, already scrambling for a circuit breaker in the long-running dispute over the power sell-off, went into overdrive as electricity workers from the retail sector went on strike for three days. Ben Kruse, secretary of the United Services Union (the main union covering the sector) commented: "There are so many problems with this arrangement that it should not go ahead."

On August 29, assistant-secretary Luke Foley told ABC TV's Stateline that a "special committee" to investigate the premier's new plan would report to a September 12 meeting of the NSW ALP Administrative Committee on "whether that plan complies with the ALP platform".

Of course, it doesn't. The May ALP state conference resolution that voted down electricity privatisation by 702 to 107 opposes the sale of any part of the power industry.

But the pressure had begun building before August 28. Backbench Centre Unity MPs, many of whom face political extinction in their outer-metropolitan Sydney marginal seats, had had enough.

One of them told the August 25 Australian: "We're sending a team to let Morris know what backbenchers think, as opposed to what so-called powerbrokers think. The delegation will be expressing support for him, but putting other points of view regarding Michael Costa's role in the scheme of things ... If there was a quarter of an inch of give, and Costa was seen getting wacked over the head, the unions would readily acquiesce."

On September 4, deputy speaker Tony Stewart said that Costa had "made comments publicly on numerous occasions that he would resign if he doesn't get his way and I'm saying he should put his actions where his mouth is". Stewart was backed by many cabinet ministers.

Even Labor grandees like former prime minister Paul Keating — who backs electricity privatisation — told Iemma that he could no longer afford loyalty to Costa if Labor was to save the privatisation policy. Iemma had no choice but to dump his treasurer.

However, with Iemma and Costa now both gone, how will the NSW ALP and Unions NSW react to Nathan Rees's commitment to continue with the sell-off the electricity retailers?

Powerful pressure is being exerted within the ALP apparatus for a "compromise" solution. Foley said on August 29: "I am confident that we can resolve the issue of electricity policy and once we resolve that there will be complete unity again. The issue of generation is always the one that has attracted the most heat within the Labor Party."

Similar pressure is coming from senior federal minister Anthony Albanese, a supporter of large-scale private involvement in infrastructure: "I want to see the parliamentary party, as well as the organisational wing of the party, unite in a constructive fashion to move away from any recriminations that have occurred."

It is not clear what the basis of a unity compromise solution might be. Costa's own counterattack after losing the battle to sell off the electricity generators was a mini-budget that would push a wave of privatisation into nearly all other areas of the public sector — ferries, water, rail maintenance and lots more. Its message to the NSW union movement was, "You bastards have stopped me privatising electricity generation, so now I'll privatise the rest".

To what degree will Rees and his new treasurer now try to implement "Costaism without Costa"? Rees was part of a cabinet that was at one with his treasurer on the content of electricity privatisation. Indeed, Iemma's attack on opposition leader Barry O'Farrell as an "economic vandal" (written in the Sydney Morning Herald when Fairfax journalists were on strike) underlined the message to NSW's appalled corporate elite that the Labor government remains "open for business" despite everything.

Iemma and Costa's message for the big end of town was clear: if the union movement and the ALP membership persist in defending public ownership, the NSW economy will be made to suffer.

If the NSW Labor Party and unions think they can buck the trend of the last 40 years — where ALP governments, state and federal, have implemented the corporate agenda irrespective of party policy — they have another thing coming.

The battle lines of the next round in the fight to block the privatisation of the electricity retailers will be decided very soon. If, despite the opposition of the USU and other power industry unions, the ALP Administrative Committee cracks on September 12 and "finds" that the privatisation of the electricity retailers is in line with Labor policy, the ball will pass to Unions NSW. In such a case, the union leadership must defend retail electricity workers' jobs (and Labor Party policy) against its recent allies in the fight at Macquarie Street.

The answer to this latest conundrum in the power privatisation saga will again be most influenced by a factor that the mainstream media never want to acknowledge — the persistence of the community and union campaign against the sell-off.

The next step in that campaign is the September 20 "Power to the People: Stop the Sell-offs" rally in Sydney, at 11am at Town Hall. The bigger that mobilisation, the greater the chance of burying electricity privatisation in NSW once and for all.

[Dick Nichols is the national coordinator of the Socialist Alliance.]

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