The OECD gives Nathan Rees a nudge

With respect to the incredibly destructive electricity privatisation debate in New South Wales, I remain a fence-sitter, at least to some degree. I was not convinced by the arguments that were put forward by the former Premier and former Treasurer Michael Costa in support of the sell-off, nor the arguments of those opposing it. In an ideological sense I do not believe there to be a simple answer to the questions raised by the associated issues in this case. The old left/right dictums of “state ownership” and “private ownership” can not simply be applied glibly to complex situations such as this one, no matter what the nation’s rigid ideological warriors might continue to believe.

It’s probably worth considering the politics of this for just a moment. The Rees Labor Government is in a spot of bother, given that its former leadership team was determined to push the privatisation through, with or without the support of the NSW Labor Party. With Nathan Rees enjoying only a tenuous command of the party organisation, he lacks the political capital to defy the rump of the party on this issue, as Iemma and Costa bravely (and stupidly) tried to do. This leaves NSW Labor looking like a bit of a shambles, with the whole issue shelved once again for now. Of course, unless the government can turn things around rapidly over the next year or two, the smart money in 2011 will definitely be on the Liberal Party returning to power in New South Wales, as unsavoury as that is for Labor supporters like myself. If and when that happens, it is likely that electricity privatisation will be back on the agenda anyway, and this is something that the Rees Government needs to consider carefully.

On balance, from what I have read, I do believe that a partial sell-off of the state’s electricity assets probably makes sense for the people of New South Wales. On the other hand, I don’t think any person within the Labor Party has yet cogently argued their case to the people of this state or indeed the party’s rank and file. It’s interesting therefore to note this excerpt from the OECD’s policy brief [PDF] associated with its Economic Survey of Australia 2008 report (pp. 8-9):

The implementation of a competitive domestic energy market needs to be accelerated, with companies still under government control privatised and the ceiling on electricity retail prices removed. Public control over electricity companies is neither necessary for securing power supply nor a guarantee of efficiency. Electricity prices have risen faster in New South Wales, where there is still a public monopoly, than in other states in eastern and south-eastern Australia since the creation of the National Electricity Market, whereas productivity gains have been smaller.

So where to now on the electricity industry Premier Rees? If anywhere at all?

On South African chicken chains and fallen leaders

I think it’s far from a bad thing for businesses to engage in a bit of political humor from time to time, so personally I welcome this from Nandos (from the otherwise bin-worthy Sunday Telegraph):

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Some quick Nandos trivia; in the United Kingdom, Nandos effectively functions as a restaurant chain rather than a run-of-the-mill burger chain as in Australia. I have a few fond London memories of sitting down with people and devouring whole chickens, chilli sauce being of course obligatory.

That old “second airport” chestnut

Linton Besser’s story in the SMH today notes that the Iemma Labor Government’s submission to the Rudd Government’s aviation review calls for a second “Sydney” airport in Newcastle. All public submissions to the review are available on this page, and some of which no doubt make for interesting reading.

The major problems facing the Rudd Government in this area are now three-fold; guiding Australia’s largest city towards an aviation solution that adequately meets the nation’s transport needs, ensuring that any new airport constructed is as environmentally sustainable as is feasible, and overcoming the intense “nimbyism” that is bound to ferment as a result of any proposals for a new airport in the Sydney area. Despite the obvious environmental concerns associated with building a new airport, I don’t think there is any doubting that Sydney can not expect to be able to sustainably service all its international traffic over the coming decades with Kingsford-Smith Airport alone. Building a new airport perhaps just outside the Sydney basin but a reasonably short train journey away from the city is probably the correct answer, and in this respect the NSW Government may be on the right track.

My travels in London have informed me somewhat in the potential benefits of this approach: in London there are no less than five international airports within a one hour train trip of the central business district. High speed private rail links or public rail links, together with high frequency private coach services operate in combination on a 24-hour schedule between each airport and key corners of the city. While I don’t believe that Sydney needs to service anywhere near as much air traffic as London, I have little doubt that the flourishing of London’s secondary international airports have produced many good outcomes. Airports like Stansted Airport have created new jobs, stimulated the local economy, reduced the numbers of people who need to drive to and from the airport, increased competition in the airline industry and reduced the cost of airfares.

If the Rudd Government selects an appropriate location for Sydney’s second international airport, is careful to engage the local community through extensive consultation, and manages the construction and ongoing operations of the airport in an environmentally sustainable manner, this historically controversial and difficult nation-building project could, at long last, prove to be a success.

Of course it needs to happen and be a success, and not just to help service Sydney’s growing aviation requirements; for the sake of the sanity of people living within 10-15 kilometres of Mascot, something needs to happen over the course of the next decade.

World Youth Day: heralding a new dawn for Barangaroo?

And what or who is Barangaroo? Barangaroo, of course, was the wife of the famous Aboriginal Australian Bennelong, and is now also the name of the “East Darling Harbour” foreshore development planned by the Iemma Labor Government. One only really needs to consider the “before” and “after” images online here to fully appreciate the unprecedented opportunities that this site offers the city and people of Sydney. It is assuredly quite rare that a city of Sydney’s size and prominence has the opportunity to reinvent such a large sector of land so close to the heart of the city.

While I know at least one person who is relieved to be out of the country for Sydney’s World Youth Day celebrations, personally I am a little disappointed to be missing out on all the hullabaloo. In particular, it would have been nice to have been part of the first major civil usage of the Barangaroo site following the demolition of the site’s storage sheds, which completed in April 2008. This is a site which, fingers crossed, will change for the infinitely better over the coming decades. It will be nice to observe things develop to the point where Sydney inherits a new drawcard for residents and tourists alike, and we all have something just a little more to be proud about.

ELSEWHERE: The State Government’s detailed concept plan is available online here. Some of the World Youth Day pictures online at the SMH are quite spectacular and give a certain flavour of the Barangaroo that is to come for Sydney.

The beginning of the end for Iemma?

I am on the other side of the world, but even I can scent a whiff of change in the air for NSW Labor. Setting aside for a moment the disturbing and unacceptable schism between the parliamentary leadership and the rest of the party in relation to electricity privatisation, it would have to be a rare punter indeed who believes that the Iemma Government is doing a stellar job of managing the state. Reiterating this perception, Tim Dick has a frankly unsurprising report in the SMH today noting that a Griffith University study has found that the NSW State Government is the most unpopular government in the country. If that wasn’t enough, Andrew Clenell and Alexandra Smith report that a leadership challenge is imminent, backed by party general secretary Karl Bitar, who has fallen out with Iemma and Treasurer Michael Costa over the electricity privatisation issue.

What I think is important at this juncture is for NSW Labor to do some seriously constructive navel-gazing. It’s all very well to talk about changing leaders, but what is really required is a culture shift in the way the party interacts with the electorate and indeed conducts its affairs. It’s arguable that such a shift can only really happen if the parliamentary leadership changes, and on that basis, in the absence of any serious prospects of improvements otherwise, I would support a change in the leadership at this point. Despite his professed loyalty to the Premier, his factional handicap as a member of the Left and his close association (as Deputy Premier) with the current leadership team, I am inclined to think that John Watkins is the right man to take the party forward.

Let’s put the last fifteen months in perspective. The Iemma Government won a fairly strong election victory in March 2007 over an Opposition that was rendered incredible and unelectable by its then leader, Peter Debnam. Thanks to Debnam’s weak leadership and somewhat flawed personage, the government honestly did not encounter the tough electoral challenge it might have expected after four years of decidedly so-so governance. From what I can gather, Opposition Leader Barry O’Farrell has not exactly been blazing the trail in the job since obtaining it a month after the election, but nor has he been doing that badly either. I think most voters would agree with me when I suggest that he is a credible alternative leader, even if he is not doing a very inspiring job. This spells trouble for NSW Labor in 2011 unless people’s impressions of the government change for the better and change fairly rapidly.

As a party member, I do feel that Morris Iemma really has tried his heart out to put things right over the past couple of years, thrown into the lion’s den as he was after Bob Carr’s abrupt resignation. Although I tend to disagree with Michael Costa’s views more frequently than I agree with them, I do believe he wants to do the best he can for the party. However, particularly in light of the electricity privatisation debacle, with the party wrenched apart in a recklessly destructive fashion, I don’t think it has been good enough. For many punters, I am sure it has not even been close to good enough. For the good of the party and indeed the state, I think both Premier Morris Iemma and Treasurer Michael Costa should stand aside and let a new leadership team try and steer the government in a fresh direction.

Business arrangement consummated

For a government that sometimes seems to find it hard to deliver coups for the state of New South Wales, the Iemma Government should be well chuffed with itself for managing to entice Richard Branson’s Virgin Blue to set up its base of operations in Sydney. Although one does wonder precisely what sorts of understandings were reached to bring in the deal, there is little doubt that this development is a boon for the state’s economy, which isn’t exactly barrelling along. The deal means more jobs for NSW, more tourist dollars spent in Sydney, and potentially lower airfares for some routes out of Sydney for Australian travelers.

A couple of questions nevertheless spring to mind:

1) What does the deal imply for NSW in relation to any future carbon emissions trading scheme between states? Has this been considered in the context of the deal that has been made?

2) Has any analysis been conducted regarding what the deal, if anything, means for inflation?Am I the only cynical one who thinks that neither of these questions were considered when the deal was reached?

The great Sydney metro dream?

Like many folks living in Sydney I suspect, I am not sure quite what to think about the Iemma Government’s grand metro proposal. Let’s consider the negative aspects to the proposal to begin with. The current government’s record on delivering successful PPP agreements is less than stellar. The project would be a massive one, taking a significant amount of time to complete, and highly likely to require the involvement and support of multiple governments. The project would represent a highly significant infrastructure investment specific to the Sydney metropolitan area, and would not really benefit all those people in New South Wales living outside this area. It is not clear what the benefits and negative impacts of the project to the city of Sydney would be precisely, in the absence of any detailed inquiry commissioned by the government. When you combine all these factors and consider them together, it would be a brave soul who does not have a doubt in his or her mind that a project of this magnitude can be carried off.

But then let’s consider the flip side of the coin. The proposed metro line would open up a fantastic and much needed transport option for Sydney’s burgeoning north-west suburban zones. The suburbs through which the metro lines pass would likely undergo something of a rejuvenation, with residential and commercial interest increasing, and traffic decreasing due to the increased use of public transport. I think it’s fair to say that anyone who values public transport and appreciates the potential economic, cultural and environmental benefits that it can bring can not help but feel a little excited about the proposal, whatever their doubts might be. The transformative possibilities that a big public infrastructure development like this would bring to Sydney are arguably hard to overestimate.

Few policy proposals in the modern history of NSW state politics come burdened with so much doubt and yet uplifted with so much hope. On the slightly sceptical side, Scott Rochfort had quite a good piece in the SMH yesterday that took an interesting line on the Iemma Government’s recent track record with PPPs. This line in particular captures something quite important, I think, and something the NSW Opposition would be on to in a hurry if they were smart:

Mr Roozendaal should realise PPP stands for private public partnership. Mr Roozendaal, like his private partners, should “accept the risk” of the road, whose opening was delayed until a week after the last state election.

When two people enter into a “partnership” they usually both take responsibility if a joint venture fails to deliver. The Government so far only appears to know the concept of taking credit for infrastructure projects that have not made it off the drawing board. Such as the new $12 billion metro.

The NSW State Government has played a generally quite adversarial role in the public eye in relation to its PPPs; more than happy to portray its private partners as the “bad guys” trying to make a buck at the taxpayer’s expense. Perhaps with this massive infrastructure project now on the table for discussion, it is time to take stock and repent for the sins of the past. Minister for Roads Eric Roozendaal should admit what is bleedingly obvious to everyone in NSW; the recent PPP agreements for the Cross City Tunnel and the Lane Cove Tunnel were far short of optimal for the people of Sydney. The government should come out, and publicly admit that it should have done better. And most importantly, the government should then make it crystal clear that it will do a far superior job with this next proposal, and outline exactly how it intends to deliver on that promise.

This sort of openness and transparency is just what the Iemma Government needs at the moment if it is to bring the people of NSW along for the ride on this ostentatious metro scheme. Without public support for the proposal and a reason to have a renewed sense of faith in NSW Labor, there is no credible way forward for the government. Indeed, without the justified confidence of the people, the average punter is more likely than not to inform Mr. Iemma and Mr. Roozendaal at the next available opportunity that based on the current form guide, they’re dreamin’ with this metro stuff.

Is Michael Costa piloting NSW Labor on a political suicide mission?

I don’t think I will find anyone in virulent disagreement with me when I assert that the Iemma Government is not exactly loved. It’s therefore quite interesting that the Premier and Treasurer Michael Costa are so keen to expend the scant political capital they have by pursuing the privatisation of the state’s electricity industry. In general it’s probably fair to say that the majority of folks in New South Wales probably don’t have a particularly strong stance on the issue, but that if asked, they would be inclined to oppose the venture. One’s first gut feeling about the sell-off of a public asset is typically negative, particularly for those with a practical or emotional attachment to the current ownership arrangements. But what is even more concerning from the NSW Government’s perspective is the imminent threat of a powerful union backed campaign against the sell-off, which could plunge the party and the state into political turmoil.

Michael Costa’s comments on the matter (as reported by Andrew Clennell in the SMH) seem to indicate that the Treasurer has resolved to push forward with the sell-off, no matter what the political costs or repercussions:

Treasurer Michael Costa has issued a bring-it-on message to the union movement and the rank-and-file of the Labor Party on power privatisation, declaring that the NSW Government will ignore any resolution of the Labor Party’s state conference this year opposing the sale.

Mr Costa issued a defiant “I don’t care” today when asked if he feared expulsion from the Labor Party should the Government ignore a resolution of the state conference in May not to go ahead with the $15 billion sale.

What concerns me is the confrontational way in which the sell-off has been managed by the government. It would seem that Costa has lost patience with the union movement and is not overly willing to bring the proposal to an open negotiating table. Rather than issuing a proposal and opening a round of consensus-focused discussions with the party membership, the electricity industry, and union representatives, the government seems to have issued this sell-off as a directive that is to be pushed through parliament come hell or high water. The union movement is probably well within its rights to do draw comparisons between WorkChoices and this sell-off, and not only because of the potentially deleterious repercussions for some industry workers. Like WorkChoices, this is a proposal that was not honestly and openly put to the people of NSW before the government’s last election, and seems to be motivated by ideology, in this case eminating primarily from the NSW Treasurer’s office.

Unless the way the proposal is being managed and sold to stakeholders and the people of NSW is fixed and fixed quickly, this is going to be an issue that is going to hang around and hurt NSW Labor for months and months to come – potentially all the way to election day, as it was with WorkChoices. As I’ve mentioned at the top and I think will be obvious to everyone, I’m not sure that the government is in such a healthy and vibrant position that it will weather any further political blows very well. The hubris exhibited by the government should it belligerently pursue an unheralded sell-off of public assets may prove to be the metaphorical straw for this particular camel.