The forthcoming state and federal elections being held in
Australia have sparked bitter political disputes over the
planned privatisations of state electricity systems. While some
groups are in favour of selling off electricity assets as a
method of raising much needed finance, others see such a move
as tantamount to treason.
In South Australia, the Liberal government has been keen to
raise funds from an outright sale of Optima Energy and ETSA
Corp., but has to pass the relevant statutes through the upper
house. The Liberals had needed two extra votes, but the
legislation passed to a second reading with the help of an
independent MP and a rebel Labour MP who crossed the floor.
However, the independent MP, Nick Xenophon, has threatened to
block any privatisation bill that did not include a public
referendum, despite being in favour of a sale.
The SA state premier, John Olsen, rejected calls for a
referendum, although a select committee is due to report to
parliament at the end of October on whether a sales committee
should be established to examine the sale, and a possible
Should the necessary legislation fail to pass, the
government could investigate a lease option on the state
electricity assets. Investment bankers and industry analysts
feel that offering a long-term 99 year lease, with unfettered
control, would enable the assets to be transferred at only a
small discount on the outright sale price, estimated to be in
the A$5-6 billion (US$3.13-3.75 billion) range. Politically,
this is a far more attractive option for the sale as public
opposition to privatisation has grown following disappointing
results from earlier sell-offs, notably the recent Auckland
In New South Wales (NSW), the Australian Labour Party (ALP)
has been forced to back down on proposals to privatise the
state's electricity assets. The ALP mooted privatisation last
year under the auspices of the NSW premier, Bob Carr, and the
treasurer, Michael Egan. However, a power play between right
wing unions and the far left of the party rejected the
privatisation plan at last October's annual meeting. Carr had
planned to raise the issue at the next annual meeting, but the
proximity of the upcoming state elections has led to Carr
reneging on the pledge as the party's annual conference has now
been postponed until after the vote.
The National Party in NSW, in an opposition coalition with
the Liberals, while supporting privatisation has insisted that
the state retain majority ownership of the system and that any
sale is conducted through a public offering, rather than
through trade sales. Analysts have pointed to previous issues
and suggested that the National Party demands for limited
ownership and a public offering may wipe as much as A$3 billion
(US$1.87 billion) off the value of the sale, as compared to a
trade sale offering majority ownership.
The leader of the NSW opposition, Peter Collins, is
committed to privatisation of the industry and plans to invest
the proceeds in rural redevelopment for the state and in
clearing state debts of A$13.6 billion (US$8.5 billion). The
NSW electricity system is estimated to be worth A$25 billion
(US$15.6 billion) and, if the opposition win the election, it
is almost certain to be sold, despite significant opposition
within the electorate.
Elsewhere in Australia, a poor result in Tasmanian state
elections for the Liberal party has been blamed on its
commitment to privatisation of the state's Hydro-Elec-tric
Corporation (HEC). Tony Rundle, the former state premier, had
pledged to sell the corporation in order to clear state debts
of A$3.2 billion (US$2.0 billion) and reinvigorate the economy.
Rundle called an early election after the minority government
failed to secure Green party support to sell or lease the three
components of HEC.
Following the election, the Labour party, under the
leadership of Jim Bacon, emerged with a majority in the House.
This came despite a pledge from the national premier, John
Howard, to write off A$150 million (US$93.7 million) of state
debt only on the condition that HEC was broken up and
privatised. Premier Bacon pointed out that the election result
was a warning to Howard for the forthcoming federal elections
that the electorate is firmly opposed to the privatisation of
such assets. Bacon also challenged Howard to write off the
A$150 million without privatisation strings attached.