NSW budget proposes sale of power assets

Saturday, June 21, 2014
A 99-year lease is, in effect, permanent. A 49% sell-off is no more than a slippery slope to the full privatisation of the power industry.

To summarise the NSW Coalition state budget announced on June 17: Sell off public electricity assets; build more private roads.

This first budget from new Premier Mike Baird is in line with the drive led by the federal government to privatise all remaining public enterprises in the interests of their big business masters.

NSW Treasurer Andrew Constance told state parliament: "We are now in control of the budget. It's no longer in control of us."

This is code for: We plan to sell off the remains of the people's property in this state, whether you like it or not.

Constance said the budget would be "built on the repair work of the last three years". This refers to drastic cutbacks that have resulted in the loss of 15,000 public service jobs, a cap on public sector wage rises, and across-the-board cuts to departmental spending, including in education and health.

Labor opposition leader John Robertson accused the Baird government of delivering a "budget built on savage cuts." He said the NSW government was passing on the health and education cuts made by the federal government in its May budget.

Greens MP Mehreen Faruqi said the government was "pouring billions of dollars into wasteful and ill-conceived projects". These include the WestConnex motorway and the north-west rail link.

The only really new promises in the budget are for about $1 billion to be spent on protecting at-risk children, and bolstering disability support and homelessness services. In reality, the core of the budget is the sale of the state's remaining government-owned electricity assets. The government proposed selling the "poles and wires” infrastructure for up to $20 billion. This would fund mostly road and private rail infrastructure in the northern and western suburbs of Sydney.

But the Sydney Morning Herald said on June 17 the pledge of new projects "largely remains a promise. The [budget] documents are littered with a raft of 'feasibility studies' worth a few million each to explore the potential for roads and hospital building -- all of which would take place after next year's election [due in March].

"A stand out example is Constance's declaration that a 'centrepiece' of the budget is 'the rebuilding of Westmead hospital.' While this is stated as a $1 billion commitment, there is only $5 million in the budget papers for planning.”

Robertson said the budget contained 69 planning and feasibility studies "in lieu of actual construction”.

He said: "The Liberals are spending over $700 million on drawing boards and glossy brochures, when they should be getting on with the job of delivering real infrastructure.”

Economics columnist Ross Gittins said in the June 18 SMH: "The election next March is shaping up as a referendum on electricity privatisation."

The bid to privatise caused “bitter division within the previous Labor government. It led to the demise of a premier and a treasurer, and was ultimately the greatest single contributor to Labor's ignominious defeat in 2011”.

Public opposition to the sale of state-owned power infrastructure remains overwhelming. A poll of voters in four regional NSW electorates in early June, conducted on behalf of the Electrical Trades Union and three other key public sector unions under the umbrella of the Stop the Sell Off campaign, showed 70.3% of respondents were opposed to the privatisation of the state's poles and wires.

Only 14% were in favour of the planned sell-off. "I can't think of any other political policy or proposal where the community sentiment has been so consistently opposed," Adam Kerslake, director of the Stop the Sell Off campaign said.

Unrest within National Party ranks is such that Monaro MP John Barilaro urged the Coalition state government to put the question of power privatisation to a popular referendum before implementing the policy.

This suggestion was obviously pushed aside, as National Party MPs eventually agreed to accept Baird's plan for a 99-year private lease of 49% of most of the state's power infrastructure.

In a minor sop to the Nationals, the government would “retail its 51 per cent control of the sector's assets but it will retain full control over the distributor, Essential. Controlling equity of the other distributors, Ausgrid, Endeavour and TransGrid, would pass to the private sector,” the SMH said in June 11.

This scheme simply provides a fig-leaf for plans for the eventual full privatisation of the energy sector in NSW. A 99-year lease is, in effect, permanent. A 49% sell-off is no more than a slippery slope to the full privatisation of the power industry sometime in the future -- when yet another manufactured "debt crisis" looms.

The Stop the Sell Off campaign has exposed the scam behind the Baird government's electricity sales pitch. Adam Kerslake said on June 2 that huge debts carried by the power companies mean the likely final price received for the public purse from any sale would be much less than stated.

Stop the Sell Off said: “The situation was even more stark when an examination was made of the ongoing state income that would be lost once the poles and wires were privatised.”

Kerslake said: "Many people in the community mistakenly believe the electricity network is a financial burden to the state, but it is actually hugely profitable and provides billions of dollars a year to fund schools, hospitals, roads and other infrastructure.

"According to the NSW Auditor General, these businesses paid almost a billion dollars in dividends to the state government last financial year, with the addition of tax equivalents and interest payments taking the total figure to more than $2.5 billion.

"Not only are the electricity businesses profitable, the revenue they are delivering to the NSW government has been steadily growing, but once sold that revenue would dry up."

The Stop the Sell Off campaign said experiences of other Australian states that have privatised electricity networks have left consumers “paying more for their power”.

"South Australia now has the highest electricity prices in the country, while customer complaints in Victoria have gone from around 5000 per year before privatisation to more than 56,000 last year," Kerslake said.

"Mike Baird is preparing to say or do anything in order to do a deal with his mates in the banking industry.

"The electricity network will not be sold to a charity; it will be sold to big business looking to collect the largest possible profits, which means higher prices, poorer service, and NSW families and small businesses worse off.”

This reality behind the budget plans of the NSW Coalition government — integral to the wider privatisation offensive of the Abbott federal government — means that the union movement and community organisations urgently need to mobilise to build a huge popular movement to stop the sell off of the people's energy and other assets.

From GLW issue 1013