Something unusual and historic in the NSW Labor Party happened today. About 200 active rank and file members of the party filled the Sydney Trades Hall auditorium for a forum, in revolt against the plans by the parliamentary party in power to privatise the electricity industry in NSW.
Even more historic was that the meeting was chaired by the party president, Bernie Riordan, who as secretary of the Electrical Trades Union in NSW has taken an enormous risk and committed himself to the campaign against the privatisation on behalf of his members.
Bernie has form on this issue. It was the campaign by Bernie and the ETU, and relevant unions affiliated to Unions NSW, that defeated the Carr and Egan proposal to privatise NSW electricity services on the floor of Labor’s 1997 NSW state conference.
Carr, to his credit, accepted the state conference’s decision. NSW Treasurer Costa has said he will not accept any rejection of the proposal by the coming state conference.
Today’s forum was addressed by Mark Byrne of the Public Interest Advocacy Centre: Bob Walker, professor in accounting at Sydney University, who attended with his wife, Betty; Con Walker, an economist; Cate Faerhmann, representing the environment movement in NSW; Steve Turner, assistant secretary of the Public Service Association in NSW and member of the Unsworth Committee reviewing the government’s decision to privatise; Joan Dawson, assistant secretary of the Newcastle Trades and Labor Council; and Doug Cameron, senator-elect and former national secretary of the metalworkers’ union (AMWU).
Mark Byne said Iemma and Costa had no mandate to sell. The intention to sell the electricity industry in NSW was not mentioned at the last election, a situation that mirrored Howard’s introduction of Work Choices after the 2004 federal election.
Byren said the plan was based on false premises. NEMMCO, the national regulatory body recognised that there was a need to narrow of the gap between electricity supply and demand in NSW, and there were three options: build a new baseload power station, encourage the development of alternative electricity supplies, including buying power from interstate; and developing greater energy efficiency.
Costa and Iemma favour the first option, and the Owen Report only examined the question as to whether a new power station would be powered by coal or gas. Byrne says there is no logical reason why we need a new power station. The maths don’t add up.
The question of prices, and whether they go up or down after privatisation, depends on regulation, not ownership, and if the regulatory rules are changed, prices can increase.
Byrne said companies had a social, environmental and regional role, but they would often not exercise their responsibilities unless they were made to. The public sector is more accountable.
Byrne accepted the need for electricity industry restructuring but did not detail this point due to time constraints.
Bob Walker gave an entertaining speech on Costa-nomics, which he says are a form of voodoo. The proposal to privatise was not based on sound financial imperatives that benefitted the state. He used the example of the privatisation of the State Bank, where NSW taxpayers lost $2.7 billion in value after the Colonial, which bought the State Bank, merged with the Commonwealth Bank.
Walker listed some fallacies propagated by Costa:
- That the generators were only going to be leased, and that was not selling them. Walker pointed out that transferring the risks and benefits of ownership is for all intents and purposes a sale
- The sale will save $15 billion for spending on assets over 10 to 15 years. Costa confuses costs and investments.
- The proposal will be at no cost to taxpayer. Walker says the rate of return to taxpayers using the public sector accounting method will be 25.2 per cent. Profits are understated due to the way in which depreciation is accounted for in the public sector. If the public sector used a private sector method of accounting, the profit to the public sector would be larger.
- Walker agrees with Standard and Poor’s (and Bob Gould), who warn now is not a good time to sell. Post-drought, and in the middle of world market chaos, now is not the time to get the best price.
- Walker said doctors bury their mistakes and treasurers sell theirs. He used the example of how Costa cost the state $2.7 million with the sale of Pacific Power. Costa said, “they are only paper losses”. Standard and Poors said there was “limited transparency on hedge backs” (February 12).
Walker said NSW has a Premier’s Accounting Stategy Committee. Walker is accused of being paid by the Unions (“If only!” he sighed). Costa says Walker favours raising State taxes. Walker accuses Costa of selling the electricity industry cheaply, just to sell.
In 1997 the state’s electricity system was valued at $25 billion, then in 2000 at $15 billion, now Costa wants to sell at $10 billion. Costa says the proposed sale will avoid state debt. Standard and Poor’s and Moodys say that there is plenty more room for borrowing by NSW.
Costa says he will invest the proceeds in building hospitals and schools. Sure, we’ve all heard that one before!
Bob Walker summed up: there is no need to sell, there are greenhouse issues that are not being addressed and there is the question of purchaser’s incentives.
Bernie Riordan then mentioned that in Queensland, where electricity is privatised, there is currently a tussle between the state government and the electricity providers. Prices have increased by 11 per cent since the sale, and the private owner wants to raise them another 6 per cent.
The problem for the Queensland government is that it has no real say about prices in a privatised industry, and neither would the NSW government. The electricity providers would make submissions to IPART.
Cate Faehrman, representing the environment movement in NSW, spoke about the conflict between federal and state government objectives. The new gederal labor government has just signed the Kyoto Protocol and committed themselves to reduction between 25 per cent and 40 per cent in greenhouse gas emissions by 2020.
Meanwhile in NSW, the Iemma-Costa government is planning to build a new power station. They are still living in 1985, Faehrmann said. They don’t get it! What is needed in NSW is leadership that looks at how the 2020 targets can be met. That is what the Owen Report and the Unsworth committee should be addressing.
Steve Turner said the proposal to privatise had been defeated in 1997 and could be again. The last baseload power station had been built in 1993. It was only half-completed due to efficiency measures at the time. That station could now be completed.
In surveys of NSW citizens, 86 per cent did not want privatisation.
In Victoria, there has been no new investment since the Kennett government privatised. In South Australia there has been no new investment since privatisation. Only Queensland has had investment in a new baseload generator since privatisation.
Private operators are not interested in investment in new facilities, only the public sector does that.
“Why privatise now, when the cost of carbon is not known?” Turner said. Rudd’s intervention had not been helpful.
Costa was saying he would only sell parts but there was no doubt he will sell more. Turner warned there were many more parts of the public sector that were up for privatisation.
The Unsworth Committee has discussed privatising consumer protection. Now there’s a conflict of interest!
Joan Dawson from the Newcastle THC recounted the history of the conflict between head office of the ALP and the rank and file in Newcastle over preselection.
The candidates that were foisted on seats in the Hunter were pro-privatisation. If Iemma and Costa has given any indication before the state election that they were going to privatise the electricity industry, Labor would have suffered a disaster in the region at the election.
The Newcastle THC supports public ownership and has establised a Stop the Sell Off Committee. She reminded those present of the party platform that still calls for “the democratic socialisation of industry to the extent necessary …”.
The proposal is all the more real for members of the party in Newcastle, as that is where the job losses, and loss of apprenticeships will be.
Dawson spoke of the need to prioritise services, not profits. In Victoria, Melbourne suffers brownouts, while power is sold by the Victorians to the national grid. This is even more serious if hospitals can’t get power to run vital life-saving equipment.
Privatisation would be electorally unpopular, Dawson warned.
She showed the meeting a letter she had just received from Michael Costa as a pensioner reassuring her that her pensioner’s $112 rebate on electricity was safe. But, she asked, what would happen to the rebate when prices increased?
Doug Cameron made a stirring speech that received several ovations. He said this week had been the best of times and the worst of times. In Canberra the Rudd Government was taking over the reins of power and apologising to indigenous Australians, but the Iemma government in NSW was trying to sell off valuable assets.
In 1991, a delegate to the NSW state conference said a state Labor government would not sell the people’s assets, they would polish them. That delegate was Bob Carr. By 1997, Bob Carr was briefed to sell, but backed off after opposition by the state conference.
In 2008, Michael Costa was trying to sell the family silver through Cash Converters. We would all wake up the next day and wonder why we allowed him do that. Cameron said this was a panic decision, made for ideological reasons.
Labor would only win the next election by building up the value of public assets.
Costa was not a leader but a follower of Thatcher, Reagan and Kennett. This is about whether we live in a market economy or a society.
Cameron said there was no doubt this was a big play. He took a swipe at Martin Ferguson and his supposed guarantees, and at Wayne Swan for his claims about the need for competition and investment. He used the example of the petroleum industry, and what competition and investment had achieved there.
A heckler called out: “What about Telstra?” Indeed! Doug Cameron said he had been to the La Trobe Valley and seen what privatisation had done to the local businesses and social infrastructure there, and he didn’t want that to happen in NSW.
Cameron said the proposal to privatise raised deeper questions about the ALP in NSW. When members of the party get into power and pursue economic fundamentalist policies in contravention of party policy, what are the checks and balances? How do the rank and file fight back? By strengthening branches, and rank and file activity.
We needed politicians who would stand up to those in power, Cameron said.
At the end of the speakers, Bernie Riordan had to go to take his family members to water polo. Before he left, he put a resolution to the meeting that supported full public ownership and opposed the leasing of the generators.
Bob Gould tried to amend it, but was gagged and the Motion was carried unanimously. Not deterred, Bob Gould then moved a second motion that all state politicians, right and left, be called on to exercise a conscience vote on the proposed sale of the electriticy industry and stop hiding behind the fiction of caucus and cabinet solidarity, which is only a convention in NSW and not part of Labor’s constitution and rules.
Despite some fumbling by the new chair, who replaced Bernie Riordan when he had to leave, this second resolution was also carried unanimously. The meeting was closed.