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?

You have to hand it to the NSW State Opposition

Despite the fact that the NSW ALP has been tearing itself to pieces over the last week on electricity privatisation, it still does not seem that the Opposition can take a trick. Brian Robins reports for the SMH today that the former Opposition Leader Peter Debnam has resigned from the shadow ministry, reportedly in protest at the Opposition’s decision to support the controversial privatisation. Because Debnam still holds that neither the government nor the opposition have an election mandate for the sell-off, it would seem he feels that his position as the Opposition infrastructure and energy spokesperson has been critically undermined.

The sell-off is an interesting policy issue for the NSW Liberals because it is plain for all to see that they are desperate to capture the sort of wave of public interest and support that enveloped Kevin Rudd and Federal Labor in the year leading up to last year’s federal poll. The Howard Government may well have been on the nose, but the Federal Opposition did a fairly good job of outlining some positive reasons to vote for a change in government. In contrast, the NSW Opposition is there, but that is about all it is. As much as some punters may be sick of Morris Iemma and NSW Labor, there is no evidence yet of any groundswell of enthusiasm for the only credible alternative. At this rate, there is little danger of that changing. Barry O’Farrell is marching his troops right along side those of the government on this fairly thorny issue, with the end result no doubt being that punters can’t really distinguish between column A and column B.

Large privatisation plans do by their very nature arouse strong emotions in people. There are likely great numbers of people out there in the electorate who would strongly support the NSW Liberals if they elected to oppose the privatisation. By supporting the privatisation, the Opposition is probably being true to its principles, but I am not sure it is playing the politics of this potential goldmine as well as it could. Peter Debnam was wrong about a number of things during his stint as Opposition Leader, but he alludes to something worth latching onto when he suggests that neither NSW Labor or the NSW Liberals have a clear electoral mandate for privatising the state’s electricity industry.

Perhaps a more nuanced stance for the Opposition to take would be to announce its own plans for privatising the industry, but to promise voters that it would not proceed with the privatisation until it received an electoral mandate at the next state poll. By taking such a stance the Liberals would stay true to both their principles and the electorate and be one up on the government. As it stands, they are foolishly portraying themselves as the Iemma Government’s complicit accomplices on this issue. Everyday people who oppose the privatisation have been shut out of the debate completely.