The NSW government’s power sell-off has descended into farce. The second round of “partial privatisation”, expected to raise $2 billion, has fallen through due to a lack of bidders. The first round sell-off in December had already created controversy, with the midnight resignation of several directors from the state-owned power companies in protest at the deal. An inquiry into the power asset sell-off is still ongoing.
Electricity retailing companies and contracts have been sold, giving private companies ownership over NSW’s electricity output under a complex “Gentrader” model. Revenue from the $5.3 billion sale will be mostly lost to the massive corporate welfare doled out to secure the sale. This includes the government forgoing $600 million a year in revenue generated from tax and dividend payments, for four years, as well as footing the $1.2 billion bill to pay off the debts of the state-owned generators.
And disgracefully, the government has committed to spend $1.5 billion to develop the Cobbora coalmine and another $1 billion to provide cheap coal to the power generating companies over the mine’s lifetime.
The government justified the deal on the basis that privatisation and the expansion of coal fired-power were necessary to secure cheap electricity for consumers and businesses. But the whole process is likely to lead to higher power bills, as the private companies seek to generate more profits by raising electricity prices. Lost revenue from the generators may well mean wider cuts to government-provided jobs and welfare spending. There will be further dependence on polluting technologies.
Instead the government should invest in more efficient energy saving technologies that can help reduce household power bills, and invest in renewable technologies, which can provide the green jobs and base load power we need.
The privatisation of our energy assets has been stopped before and can be stopped again. The union campaign that stopped the complete privatisation of the power generators shows that privatisation can be stopped—although the union leaders then cut an unnecessary deal with the government and wound down the campaign.
Liberal Barry O’Farrell, who is almost certain to take power after the March state election, has refused to rule out further privatisation, making a second round of privatisation sales likely after the state election. A united campaign that brings together the unions, climate activists, The Greens and the wider public is desperately needed. These deals make fighting climate change harder and are a stepping stone to the complete privatisation of our energy assets.
By Eliot Hoving