The global financial crisis is, again, showing up the savagery of the unfettered rule of the market. Governments are responding by increasing financial regulation, nationalising parts of the economy, and spending big on public infrastructure programs to pump-prime a stagnating capitalist economy. Not in NSW.
On November 11, the NSW Rees Labor government brought in a mini-budget aimed at shoring up the state's AAA credit rating while slashing public services. Plans to expand public transport were shelved, rail fares have been hiked, jobs and services have been cut and public assets will be privatised.
Greens MLC John Kaye condemned the government for persisting with the "flawed sell-off" of the state's electricity retailers. He also criticised "unnecessary increases in household costs" and the government's "failure to prepare the state's economy for climate change".
Socialist Alliance NSW co-convenor Alex Bainbridge told Green Left, "The NSW government should be encouraging people to take the train — not get off it".
"It doesn't make sense to cut jobs when we're in the midst of an economic downturn. Rees should be creating jobs: spending on infrastructure and building the sorely needed rail extensions. Then, commuters would be able to move out of their cars. Increasing fares on top of this just keeps people in their cars, polluting the air, and paying a tax for the conjestion that the government created!" Bainbridge also condemned the partial sell-off of energy, despite a majority of NSW wanting it to stay in public hands.
Public transport slashed
Sydney is already chronically under serviced by public transport. The Christie report, commissioned in 2001 by then premier Bob Carr, recommended a massive infrastructure program of heavy rail and metro lines to cope with the projected population growth in Sydney's outlying suburbs. The rise in oil prices since 2001 has also forced larger numbers of commuters onto too few buses and trains.
While the NSW government refused to implement the report's recommendations in full, it did agree to build an extra rail line from Chatswood to Epping (but not extend it to Parramatta). It also agreed to two metro lines, to be constructed as public-private-partnerships (PPPs), from the city to Parramatta and to Sydney's north-west. It also agreed to extend the heavy-rail line from Glenfield to Leppington in the south-west.
These plans have been shelved. But the government did announce plans for a "mini" metro to run from the city to Rozelle in the inner-west — a service for the now marginal ALP seat of Balmain.
Public transport fares are to be increased, on average, by 38%. Free transport for school students has been scrapped, forcing parents to make a "co-payment" of $45 per year for primary and $90 for high school students each year.
The news is also bad for those forced back to the car. A new congestion tax will be introduced on the Harbour Bridge and tunnel (an extra $1 during peak hour) and the levy on parking spaces in the CBD will rise from $950 to $2000 a year. The cost of compulsory third party insurance (green slips) has been increased by $10 a year.
The government claims that it will use the $200 million raised from the extra Harbour toll to pay for more buses that will (ineffectively) replace the scrapped North West Metro.
Attacks on workers
Overtime for nurses will be slashed — "saving" more than $900 million. The government claims that shortfalls will be made up for by a better rostering of available staff. But the decision came just as the Australian Medical Association reported that every NSW hospital was overcrowded.
New appointments to the public service will be frozen until June 2009, meaning that some 4200 jobs will be lost.
Mark Lennon, the new UnionsNSW secretary, told SBS news on November 11 that he was concerned about the public service cuts. "Every time a non-frontline support worker loses a job, that takes away the ability of that frontline worker to perform and give the people of NSW the best service that they deserve", he said.
NSW Public Service Association secretary John Cahill told SBS news that, "The PSA is going to hold this government to account for each and every job cut".
The mini-budget advances the government's privatisation agenda, including the sell-off of the state's electricity retailers and the right to sell wholesale electricity.
NSW Lotteries; Pillar, the government's superannuation fund administrator; and some commercial assets in Darling Harbour, such as IMAX, will be sold. Unused school sites and government-owned nursing homes will also go. The state-owned WSN Environmental Solutions (waste-disposal company) is also in line for sale.
Rail maintenance and the Sydney ferries are also on the chopping block, but only after a year-long "benchmarking" of the existing workforce against private sector operations is completed.
The Rees government has cut more than $3 billion from spending over the next four years with its slash-and-burn mini-budget.
Roozendaal told ABC TV's Stateline on October 17 that only by protecting the AAA rating would NSW avoid an "extra interest expenses of over $100 million per annum" by 2011-2012.
However, Bob Walker, professor of accounting at the University of Sydney, and Betty Con Walker, former Treasury official, argue in a September 20 briefing paper that the budget costs of the state's credit rating slipping to AA+ would be only $7-$14 million per year.
"What we should be doing is investing for the future … I'm not sure the AAA rating is worth as much as the government is making out", Scott Haslem, chief economist at UBS told the November 10 Sydney Morning Herald. Brian Radican, an economist at Macquarie Bank agreed. "Slipping from AAA to AA+ probably wouldn't be such a bad thing", he told the SMH.
This bit could be cut out, depending on the Power to the People public meeting article (or it could be added in to that article, depending on whether there's a need for some context).
NSW Labor won its fourth term in March 2007 largely because of mass disaffection with Work Choices. In April that year, then Premier Morris Iemma set up the Owen inquiry to look into the state's funding and energy needs until 2020.
Unsurprisingly, Owen recommended selling off electricity generation and retail. This was the only way to encourage the necessary private sector investment, he argued, to build a new power station by 2013-14.
The NSW government had hoped that the electricity sale would raise $10 billion — money it said it would spend on infrastructure. But huge public opposition scuttled the plan in August, and the government decided on a "Plan B", the privatisation of electricity retailers and wholesale electricity which did not require parliamentary endorsement. Iemma announced plans for a mini-budget at the same time.
While Iemma and his treasurer Michael Costa were replaced by Nathan Rees and Eric Roozendaal, the same neo-liberal strategy remains.