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
referendum.
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 blackout.
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.