Power Privatisation in NSW: The Pros and Cons
It's election time, and a central plank to Premier Mike Baird's campaign is the proposed selling off - or partial leasing, to be precise - of the electricity grid's “poles and wires”.
It's not for us here at the FiftyUp Club to tell you which way to think on the issue, but we would like to help you make an informed decision. So here's our list of pros & cons:
Arguments For -
Statistics:The Australian Bureau of Statistics has released data showing Australians who live in states with privatized electricity supplies have faced smaller price rises over the past two decades compared with their counterparts in other states.
A study was conducted by respected analysts The Grattan Institute, showing retail prices have risen more in Sydney and Brisbane than in Melbourne and Adelaide, where the Victorian and later the South Australian governments had privatized the electricity industry from the 1990s.
From 1996 to mid 2014, in nominal terms, retail electricity prices have increased by 208% in Adelaide and 158% in Melbourne - compared with 212% in Sydney and 217% in Brisbane.
According to the Institute's energy director, Tony Wood, “Privately-owned businesses run at lower cost to the benefit of consumers”.
The Pay-off:
Baird wants to go ahead with the sell off so he can get his hands on a $20 billion war chest to build new infrastructure including a second Sydney Harbour rail crossing and $1 billion of Western Sydney rail upgrades.
Arguments Against -
Jobs:Privatization has become a dirty word in many sectors of the community, particularly among Labor and the Unions, who are running a campaign saying it will cost jobs and drive up the price of our power.
On the jobs point, they are probably correct. It is likely a private operator would cut costs in the network businesses, and both the number and quality of jobs in these businesses have benefited over the years from government ownership.
But Baird's infrastructure plan would also create jobs, so there would be both winners and losers on that count.
Experience:
The public is rightly suspicious of government selling off public assets which then become private monopolies charging monopoly rents. You only have to look at Sydney Airport, the Commonwealth Bank and Qantas to see how those businesses have been changed by privatisation.
In those states where poles and wires have been privatized, consumers report feeling worse off, despite the numbers quoted above.
In Victoria, 67% said people in the state were worse off, while in South Australia, 74% said people there were worse off, in a union-commissioned poll.
There is also the loss of annual revenue from these businesses to consider, given they paid their government owners $1.7B in 2012-13, falling to a projected $407M in 2017-18.
So, what do you think?
And as always, whatever the election result, make sure you're on a good plan so you're protected against whatever may happen to power prices.
