Open letter to NSW Labor parliamentary caucus members to urging a vote against electricity privatisation

Originally published on Now on . - 22 Jul 2012

The following letter was e-emailed to all members of the State Parliamentary Labor Caucus with e-mail addresses listed . Any responses, together with how they voted on the privatisation legislation, will be include on this page.

This week Premier Morris Iemma and Treasurer Michael Costa will ask you to vote for a bill for the sale of NSW's publicly owned electricity generating and retail assets.

These assets represent 21% of NSW's infrastructure assets, earn $692.3 million annually and variously contribute $1.3 billion to NSW's state budget. Their sale would cause a significant reduction in NSW's overall worth, its financial security and, notwithstanding claims to the contrary, its energy security as control of NSW's power generation is transferred from the people of NSW to to the boardrooms of foreign multinational corporations, or even to the governments of foreign superpowers such as China.

These assets rightly belong, not to Morris Iemma or Michael Costa, not to the NSW Parliamentary Labor Caucus, but to the people of NSW who have paid for these valuable assets through their taxes and electricity bill over many past decades. You are being asked by Premier Iemma and Treasurer Costa and to use the vote that the NSW public has entrusted you with to allow this sale to proceed even though that same NSW public has repeatedly and emphatically made it known to you that it opposes this sale.

As you cannot be unaware, a recent opinion poll puts opposition to the sale at 86%, whilst another puts opposition at 79%. On the last occasion privatisation was put to the public, at the 1999 state elections, it was repudiated overwhelmingly.

Morris Iemma and Michael Costa would have us believe that, by defying the popular will, they are demonstrating true strength of character, in order to enact policies that they know to be in the best interests of the NSW public. This theme has been parroted repeatedly by their cheer squad amongst corporate newsmedia.

Perhaps others would argue that strength of character would be better demonstrated if, instead, they were prepared stand up, on behalf of the NSW people to the powerful vested interests who are demanding the sell-off to suit their own selfish short-term interests.

So, where is the evidence that privatisation is in the best interests of the NSW public? Contrary to Morris Iemma's claim of the Auditor-General's (PDF 354K) was a 'ringing endorsement' of his position, no actual finding either for or against privatisation was presented.

In a letter to the Australian Financial Review of 27 August, Morris Iemma claimed that "the proposals have been exhaustively scrutinised" by the Unsworth committee. If this is so, I think many NSW citizens would be most interested to know where.

Barrie Unsworth's (PDF 58K) made a sweeping claim that all the 12 criteria for the sale had been satisfied, or, at least will be satisfied if recommendations appended to the report were to be agreed to. However it failed to substantiate this in regard to any one of those criteria.

In contrast, the dissenting minority (PDF 649K) showed with detailed evidence that the criteria had not been met. Here are some of the grave concerns raised in that report:

  • That Australian Bureau of Statistics figures show that the amount spent on electricity in Victoria and South Australia where electricity assets have been privatised is greater than that spent in NSW.(page 4)
  • That the accountability through the ballot box, parliamentary processes and enforceable public sector behaviour codes, by which the public can currently hold electricity suppliers to due account for their actions, will be lost. (page 15)
  • That as a result of privatisation in other states, training opportunities, including apprenticeship training, have been lost (pages 11-12)
  • The shedding of jobs that inevitably follows privatisation. Many employees, particularly retail employees, have not been given employment guarantees, Others have been given guarantees but only for up to 5 years. Almost certainly many of these jobs will contracted out or off-shored. After privatisation in Victoria, "jobs were lost and house prices dropped dramatically (in the Latrobe Valley). The impact of this was that families who needed to leave the region to look for new employment simply couldn’t afford to." (page 10)
  • That those on lower incomes will be disproportionately affected by privatisation. (page 10)
  • The likelihood, as the experience of previous privatisations has shown, that private investors will not invest in base-load electricity generation and that it will be necessary for the Government to do so in order to prevent blackouts. (page 7)

Morris Iemma asks in he letter to the Australian Financial Review that you "objectively consider the hard evidence" for privatisation. So where is the "hard evidence"?

As has been shown in the minority report and in many other documents, the "case" for privatisation is illogical and self-contradictory.

Morris Iemma that the sale "will save the Government $15 billion in the cost of a new generator needed by 2014."

On the one hand the NSW Treasury is to obtain a windfall to spend on other government services and to reduce debt and on the other hand, money that the Government cannot now find to provide for the necessary upgrade of NSW's electricity infrastructure will somehow materialise out of thin air. Evidently, Iemma and Costa would have us believe that, on top of providing the funds necessary to purchase the assets, investors will, out of the goodness of their hearts provide additional billions for the upgrade.

And I thought it was opponents of privatisation who are supposed to be the ones who believe that there is such a thing as a free lunch!

However, the public are clearly not that stupid. They understand perfectly well, even if Morris Iemma and Michael Costa appear incapable of understanding, that they will pay, and pay very dearly for any short term financial gain obtained by the NSW Treasury for the sale of those assets, and they will pay more should the new private owners choose to invest additional money.

That is why the NSW public remain so resolutely opposed to the sale.

There is absolutely no need for the sale. All the money to upgrade NSW's electricity infrastructure could be obtained far more easily by simply borrowing the funds outright. As former Auditor-General Tony Harris pointed out:

A large additional investment in NSW’s generation and distribution sectors is pressing. But even with recent interest rate increases, needed investments can earn sufficient gross profit to service borrowings. And such borrowings, made outside of the general government sector, would not affect the government’s budget. Still less would they imperil the state’s AAA status.

Please ask yourself: If Treasurer Costa and Premier Iemma are sincere in their stated intention to secure NSW's electricity supply, then why have they any "Plan B" should their legislation be rejected by the NSW Parliament? Why have they apparently allowed an irrational ideological prejudice prevent them from borrowing the necessary funds?

Please ask yourself: What is the point of parliamentary democracy if policies repeatedly rejected by the electorate during the course of elections, and in repeated opinion polls, are nevertheless passed by the Parliament?

Please ask yourself: Why should any self-respecting member of the Labor Party continue to make the effort with their donations, and with their time, to get elected to office representatives who then turn around and ignore their earnest wishes against privatisation as was emphatically stated by the 702 to 107 vote at the state Labor conference? Why should any such parliamentary representative presume the right to continue to hold office in defiance of the wishes of both ordinary rank-and-file party members and of the broader community?

I ask you not to turn your back on the rank-and-file of your party, on the trade union movement and on the broader community. I ask you to, instead stand with the NSW community and to stand up against the bullying of Michael
Costa and, behind him, the corporate newsmedia and the wealthy financiers, and vote to keep New South Wales' publicly owned electricity assets in public hands.

Yours sincerely,

James Sinnamon
on behalf of

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