Outsiders in their own party

The Labor Party ranks according to Michael Egan

Ed Lewis

The public discussion over electricity privatisation in NSW is increasingly becoming a traditional union bash in the media. Today, Michael Egan, another former Labor Party official and politician, steps forward to read a lecture to the party’s ranks about a properly respectful attitude towards politicians.

Egan was NSW treasurer for 10 years, which included the attempt of Labor Premier Bob Carr in 1997 to persuade the Labor Party of the merits of privatisation. After the Carr proposal was defeated at the NSW Labor conference in that year, Egan ruled out defying the conference, saying:

“It is a matter of principle. Conference is the supreme body in the party and this is far too big an issue. It would rip the party apart. Premier Carr and I and the cabinet and the caucus are Labor loyalists. It’s as simple as that.”

Not any more, apparently. These days Egan is chancellor of Macquarie University, and he’s urging Morris Iemma and Mick Costa to ignore the Labor Party conference’s overwhelming rejection of privatisation.

Now he says Labor governments would be “unelectable” if they allowed themselves to be dictated to by “outside forces”. It would be interesting to know when Egan reached the conclusion that the ranks of the Labor Party are an outside force in their own party. One could hazard a guess that it was some time after he left parliament and stopped thinking about who would support him in pre-selection ballots and get out and work for him in election campaigns.

Egan, who is still a member of the Labor Party and of the Centre Unity faction, does quite a bit of union bashing in his article, going so far as to accuse unions of trying to use Labor governments as “their very own protection racket”. He doesn’t indicate what he thinks of business attempts to influence government. Can we look forward to an article from him on businesses pilfering the public purse through secret (sorry, commercially confidential) contracts, carefully disguised subsidies and favourable regulations?

In a statement that no doubt will be noted with considerable interest by his fellow Centre Unity members, Egan goes on to say it’s “a fiction” that Labor conference decisions are binding on Labor governments. That’s not what he said in 1997, and it’s not what most Centre Unity members thought when they voted at the Labor conference on May 3-4.

Egan then goes on to accuse the opponents of privatisation of being ideologically driven, as if the neoliberal ideology of the privatisers were the natural order of things, and then runs out a few standard arguments for electricity privatisation, all of which have been made in more detail elsewhere, and which are in any case taken up by The Australian‘s environmental writer Matt Warren.

Warren, as Clive Hamilton points out in his book on climate change politics, Scorcher, is a former lobbyist for the coal industry:

In August 2006 the paper had announced Warren’s appointment by writing that he had “spent the past 12 years working in environmental policy and strategy, both in Australia and overseas. He has advised industry and governments on a range of technical and strategic environmental policy issues”. What The Australian did not say was that Warren’s previous job was director of external affairs for the NSW Minerals Council. As the PR flak for one of Australia’s most active coal lobby groups, Warren was responsible for media campaigns attacking green groups protesting about climate change. (Scorcher, p 198 )

Warren, it seems, is scratching for arguments to justify privatisation. He admits: “The three government generators in NSW — Macquarie, Delta and Eraring — are run efficiently and privatisation will not deliver any sweeping improvements.”

The main benefit, he says, will be that the sale of the generators will free up capital needed in other areas such as transport and health. In fact, that’s dubious. In the health sector the main problem is not facilities and infrastructure but staffing, and a one-off capital injection won’t make any difference. The problem in health is recurrent expenditure, and the main source of that for all the states has been appropriated by the federal government in the form of the GST.

While the GST is tossed into the federal pot to help the federal government on its way towards a federal budget surplus widely predicted to be in the region of $20 billion, public services in the states are being starved of funds.

In the case of transport, the NSW government is notorious for making announcements about big infrastructure projects that never materialise, and the piddling amount the government is likely to realise from an electricity sell-off in the context of a global recession and an imminent national carbon trading regime is unlikely to make any difference to that.

Warren also runs out Paul Keating’s argument from earlier in the week, that the electricity assets could have been sold for $35 billion in 1997 and are worth only $15 billion now. Apparently Warren doesn’t read the daily papers, or at least not very carefully, because he doesn’t even refer to NSW Labor president Bernie Riordan’s demolition of that argument in Thursday’s Sydney Morning Herald:

In 1997, the figure used by the privatisation proponents Bob Carr and Michael Egan was $25 billion, not $35 billion as quoted by Mr Keating. Also, anyone who knows anything about the industry knows the real value in the industry is tied up in the transmission and distribution networks.

Mr Carr wanted to sell these, Morris Iemma does not — which explains the price differential from $25 billion in 1997 to $10 billion in 2008.

Warren then goes on to say electricity prices must inevitably rise as a result of efforts to curb pollution and slow climate change, which seems to be an excellent reason not to hand over public assets to private price gougers, who regard it as their natural right, and in fact their duty under corporate law, to extract as much profit as possible from whatever source. This no doubt would include getting their hands on and then trading in, carbon emissions concessions that are likely to be demanded by the private buyer in any privatisation of the electricity assets.

Warren doesn’t have a lot more to say, except to run out some dubious and highly disputed figures on electricity prices since privatisaion in Victoria and South Austrralia, and to speculate on the prospects for privatisation in other states, which is possibly the main point of his article: the NSW privatisation is the key to a lot of others.

Adele Ferguson pointed this out in The Australian’s business pages a few days ago:

If energy reform proceeds, Iemma is expected to next raise money for infrastructure reform by targeting ferries, followed by the sale of State Transit Authority, NSW Lotto (which runs Lotto, Powerball and Instant Scratchies), and Forests NSW (which is responsible for managing 2.4 million hectares of native and planted forests in the state).

Warren adds a few more plums to the corporate wish list: electricity assets in Queensland, Western Australia, and perhaps even Tasmania’s hydroelectric dams.

Meanwhile, if the likes of Michael Egan have their way, the Labor Party ranks will become outsiders in their own party. No doubt he sees that as a fitting payback for their defiance in 1997.

Tags: electricity privatisation, Labor Party