australia: October 22, 2008

In early September during the NSW Labour Party Conference held in Sydney, delegates overwhelmingly rejected a State Government proposal to privatize the State’s electricity sector. Premier Morris Iemma, who has since resigned, planned to sell Government-owned electricity retail assets and lease power generators. Mr. Iemma explained that private sector investment was necessary and the Government could not fund both electricity generation and related services.

During the conference, the reception was quite hostile for all pro-privatization speakers, but the most raucous response was reserved for recently retired Treasurer Michael Costa who argued the Government’s case favoring privatization.

The power sell off was successfully scrambled by party opposition. As a result, Mr. Costa lost his position as Treasurer as part of a Government reshuffle following the resignation of Deputy Premier John Watkins. The Australian Industry Group NSW Director Mark Goodsell described the collapse of the sell-off plan as extremely disappointing and dangerous for the State. He claims that without greater private investment NSW will now face an uncertain future in terms of its power supply needs. He added that whatever is happening politically, the bottom line was that the Government was going to have to make a decision about building two power stations which are going to cost the taxpayers upwards of $10 billion. The newly elected NSW Premier Nathan Rees has claimed that the State does not have the money and funds are going to have to come from allocated education, transport and other infrastructure budgets or NSW will start to go into dangerous levels of debt.

Mr. Goodsell said that electricity sector privatization has occurred in every other State where it was introduced as a means of the Government spending more on health, education, and public transport. He closed by saying the private sector was now effectively barred from assisting the NSW Government cope with rising infrastructure costs and other alternatives needed to reviewed.