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Carr’s Column – Electricity Privatisation

August 31, 2010

The Chanticleer column in today’s Financial Review (September 1 2010) provides an account of the comedy of errors – that case study in the paradox of unintended consequences – NSW electricity privatisation. It’s a sound analysis.

Liberal leader O’Farrell settled on a policy of anti-privatisation in August 2008, sticking with it to this day.

The article vindicates the stand taken by my successor Morris Iemma to sell the assets in the face of union and party opposition.  Iemma was right: the party and the union’s and the State Libs – colossally wrong.

Says the author Tony Boyd:

The best option for taxpayers was the failed initial attempt to sell the entire business in 1998 by Labor premier Bob Carr and his treasurer Michael Egan.  At the time, electricity assets were sold in Victoria for about $25 billion.  And the expectation was that NSW would raise about $33 billion for a business about 60% bigger than the Victorian assets.

This would have been a terrific deal for NSW taxpayers.  It would have enabled the state to exit an economic investment that was hugely risky and to retire all debt and, in addition, launch a huge program of infrastructure renewal (on top of the $61 billion that was to be invested in infrastructure during my 10 years as premier). 

Yes, an undoubted boost to the state.

Blocked by a Labor conference, blocked by unions, blocked by the State Liberal Opposition.

Now the state government is managing a far more modest version that sells the retailers and sells the output of the power stations without selling the power stations themselves and does it at a time when the value of the assets has contracted.

It might bring in $5 billion.

Great work by those who blocked the original 1997 deal and all it would have meant to the taxpayers of this state.

Take a bow.

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