John Kaye on the myth of energy privatisation


Below is an abridged version of a speech by Greens NSW parliamentarian John Kaye at an anti-privatisation forum held at Parramatta Town Hall on July 16.

Macquarie St is not just the home of state parliament. It is the fountainhead of the myth that privatisation is about delivering better services and improving the economy.

Those who are pushing the sale of the state's assets and services really believe that the process of transferring economic activity to the private sector will create a better class of person.

Who said that Margaret Thatcher was gone, who said that Frederick Hayek was dead and that Michael Costa has retired? With a government run by the likes of finance minister Joe Tripodi, treasurer Eric Roozendaal and corrective services minister "comrade" John Robertson there is no need for the past champions of the privatisation cause.

At the core of the argument for the massive sell-off is an underlying philosophy that says there is something wrong with public provision.

The perceived wisdom uses myths about low quality outcomes and higher costs in the public sector to cover the conviction that public ownership creates moral weakness.

Regardless of the volumes of evidence to the contrary, regardless of the track record of public electricity, public education, public transport and public waste services, the myth persists and the sell-off bandwagon rolls on.

The long list of services and assets up for sale is now joined by the process of education itself. School league tables and the ideological edifice that supports them are all about transforming schools into competing businesses with education a commodity traded through a market.

The debate around simplistic comparisons of schools is not about freedom of the press, school accountability or a parent's right to know. It's about busting unions, reducing education to a simple set of numbers that can be assessed, compared and traded.

The largest and most environmentally damaging privatisation in NSW is Premier Nathan Rees' so-called electricity sector reform.

Despite repeated claims that his plans for the state's power industry are different to those that brought down former treasurer Michael Costa and former premier Morris Iemma, nothing much has changed.

The only difference is that instead of handing over the electricity generators to the private sector for 50 years, the trading arms of the electricity generators will be leased out for 25 years.

Once decision-making about the amount and price of electricity sold has been privatised, public control over the future of the power stations has been lost. In effect, the people of NSW will have no say over the future of the source of 37% of the state's greenhouse gas emissions until the year 2035.

Combined with private sector ownership of the public retailers that supply electricity to 94% of the community and the sell-off of development sites for new coal-fired power stations, the electricity future of NSW will be entirely under the control of multinational corporations.

Their only interest will be turning households into cash cows, and driving up electricity consumption, profits and, at the same time, greenhouse gas emissions.

The leading argument for this massive loss of public autonomy is that the state budget desperately needs an injection of $8 billion. Yet to achieve this injection of cash, NSW has to give away an income stream of $1 billion a year.

It is voodoo economics that can only work for a government that thinks it is going to be out of power in another two years.

It is an exceptionally poor deal for the rest of us, made even worse by a global financial crisis that is turning a sell-off into a fire sale.

The reality of balancing budgets and keeping the state's economy going through hard times is hardly radical. Borrowing now to maintain and improve the standard of services and invest in new infrastructure can be paid for when the economy returns to a more normal state. This accepted wisdom has no traction in NSW.

It appears that in the "Premier State" this would upset the ratings agencies, Moody's and Standard and Poor's. They know a lot about economics. In fact they know everything there is to know the global financial crisis, because <193> they caused it!

These same cash-for-comment rating agencies that are driving privatisation in NSW gave treasurer Roozendaal the big tick for pushing more and more of the state's activities into the private sector.

Perhaps before NSW accepts that this is the path to economic stability, they should ask the people of California what deregulated, private ownership of the electricity industry means. For them, it led to skyrocketing power bills and blackouts on a regular basis.

The second big justification that Premier Rees and finance minister Tripodi put forward is that the state's budget can't afford the $15 billion investment needed to bring the electricity industry up to date.

What they don't admit to is that they've already committed households to paying off $16.4 billion in new wires and poles for the distribution network over the next four years.

There is one point of agreement between Rees and his finance minister on the one hand and the Greens and the rest of the progressive movement on the other, even if for very different reasons.

This state really cannot afford to spend $15 billion on new coal-fired power stations because it would boost electricity industry greenhouse gas emissions by 50%. The additional 30 million tonnes of CO2 each year would be an unacceptable burden on the climate.

The Rees-Tripodi plan is to privatise in order to build more coal-fired power stations in order to pump out more greenhouse gas emissions. The fig leaf of an excuse is clean coal.

The entirely mythical prospect of capturing and burying 80 million tonnes of CO2 each year remains a twinkle in the eye of the coal industry and their sycophants in Macquarie St and Canberra.

While clean coal conceivably might work, at least in a technical sense, the risk that it will not and even if it does that it will be prohibitively expensive renders reliance on this technological fix a massive gamble.

The downside of that wager will be felt by every household in NSW, regardless of whether they wanted to bet on carbon capture and storage or not.

If clean coal fails to deliver, the state will be left with a ballooning greenhouse account and a massive cost of finding alternatives.

The third arm of the Rees government's argument for the sell-off is that this is a way of cutting costs and reducing power bills.

If there is any truth in this claim — and experience elsewhere suggests that there is not — then it will be achieved by cutting services.

The large scale downsizing of the call centre workforce and their replacement with workers in low-waged countries will not only degrade the quality of response. It will cause massive unemployment and hardship, particularly in rural and regional centres.

Call centre workers around NSW are taking industrial action against this by informing consumers about electricity privatisation and what it means for the community. All power to their phone arms. They are standing up to Rees, Roozendaal and Tripodi!

NSW needs a new vision for its electricity industry. Coal-fired generators pumping 57 million tonnes of carbon dioxide into the atmosphere every year must have a use-by date. Serious investment is needed now in phasing-out coal, improving energy efficiency, and making households part of the effort to reduce greenhouse gas emissions and electricity bills.

Handing over our power stations and retailers to the private sector provides an absolute guarantee that there will be no progress towards a low emissions industry. The state will be locked into a high-polluting, energy-intensive future, and shut out of the new green jobs economy.

Thousands of high-quality, unionised green jobs will be squandered because the new corporate owners of the power industry will not let us go there. This will be a jobs disaster and a climate disaster.

The reality of the success of public education, TAFE colleges, electricity, the ABC, public health and transport in delivering quality outcomes — despite all the failures in planning and funding — stands as a massive contradiction to the privatisation philosophy.

The right cannot afford to live with that contradiction. The simple answer is to vandalise that which is done collectively for the common good so that it doesn't deliver those successes, thereby removing the incriminating evidence of the bankruptcy of their ideology.

The very first task is to defeat privatisation. The Greens will introduce into parliament when it sits again in September our "No Mandate, No Privatisation" bill, which will mean every politician will have a chance to put their position on privatisation on the public record.

In March 2011, every politician will have to front up to the electorate and own up to their vote on the ability of governments to strip bare the state's public sector.

But there's a much bigger task than just stopping privatisation. A new vision for public provision should do more than just expand existing services and create new services.

This is the time to develop the capacity to look after those who can't look after themselves, to create an economy dominated by social justice, to take risks and innovate, and to provide a standard of employment that puts the private sector to shame.
But mostly. now is the time to guarantee those things that we as a community can do collectively for the common good.

Sydney protest against prison privatisation on August 6: