NSW government pushes privatisation and cutbacks

In the context of the global financial crisis, governments across the world have abandoned financial conservatism, proposing significant expenditure programs, often funded through debt.

The Chinese government recently outlined US$586 billion in infrastructure and welfare expenditures. Kevin Rudd is spending $10.4 billion on a stimulus package.

However, NSW Premier Nathan Rees’ recent minibudget rigidly adhered to neo-liberal orthodoxy in attempting to limit the NSW deficit through cuts to infrastructure expenditures, caps on public servants’ pay and a fire sale of assets.

Rees is proposing to privatise the state electricity retailers, lotteries, waste management, two prisons (Cessnock and Parklea) and Pillar (which manages public sector superannuation).

Other items on the sell off list are Australian Technology Park in Redfern; the Harbourside Shopping Centre, the Sydney Aquarium and the IMAX Theatre, all in Darling Harbour; the EnergyAustralia office block opposite Sydney Town Hall; and dozens of school sites and other properties.

The Rees government came to power in the wake of the successful campaign by unions and the ALP rank-and-file against then Premier Morris Iemma’s plans to privatise NSW’s power assets.

But Rees has revived the power sell off. His electricity retail privatisation would pave the way for privatisation of electricity generation assets. His minibudget represents a continuation of his predecessor’s right-wing policies. For example, he has cut proposed expansions to public transport including the North-West Metro rail line.

Instead of scrapping Iemma’s modest plans, Rees should be massively expanding Sydney’s public infrastructure. The 2006 Independent Inquiry into Financial Sustainability of NSW Local Government calculated that NSW local governments had a $6.3 billion backlog in infrastructure renewal.

The downturn in the Australian economy strengthens the case for spending. Recent ABS data shows a steep decline in private construction and infrastructure expenditures. Unless governments offset this, economic growth will grind to a halt and hundreds of thousands will be put out of work.

Despite claims that the NSW government is in no position to borrow, its debt levels are not high by international standards. Even if NSW’s credit rating were downgraded to AAA minus interest payments on existing debt would only increase by $14 million per annum.

Governments can also easily increase future revenues to pay off debts incurred during economic downturns.

The minibudget contained two such positive proposals, raising land tax from 1.6 per cent to 2 per cent on properties worth more than $2.25 million and raising coal mining royalty rates by 1.2 per cent to generate an additional $152 million per annum.

The kind of mass agitation against privatisation inside the Labor party and the unions that we saw in the lead up to the Labor party state conference needs to be rekindled. We also need mass rallies of unionists, Labor party members and other community activists.

The Power To The People Coalition, which helped organise against Iemma’s privatisation plans, is attempting to construct a strong campaign against the cuts and privatisation proposals in the minibudget.

By Kieran Latty

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