THE POWER SALE: DARK DAYS, INDEED
29 August 2008AS if the people of NSW had not suffered enough through a decade of incompetence and mismanagement at the hands of Labor, when the conservative seat warmers finally get the chance to do something positive for the state after 13 years of irrelevance, they fail the test.
The decision of the Liberal leader, Barry O'Farrell, and the Nationals leader, Andrew Stoner, to effectively kill off any chance of privatisation of the state power sector - now or in the forseeable future - is the worst kind of short-term political opportunism; it is spectacularly hypocritical from a party which is supposed to stand for free enterprise, private ownership and smaller government. Instead the Coalition is responsible for putting up the shutters with the clear message: NSW is closed for business.
It needs to be understood that this is not just about securing future energy supply for the families and businesses of this state. That is serious enough. This decision also has other ramifications. First, it will by necessity ensure that funds are diverted from other vital infrastructure investment, most probably road and rail projects. Second, it sends a clear message to global infrastructure investors - whether in power assets, roads, rail or other areas - that NSW does not want your money; that it is not a place to do business. Power companies holding off on investments to await developments in NSW will now surely look to divert their funds elsewhere. Third, it threatens the economic wellbeing of the state by forcing government to borrow more and therefore diminish its credit rating, starting a cruel credit cycle that leads to even more expensive borrowing. Standard and Poor's reacted to the news yesterday by immediately putting the state on credit watch.
The Coalition's reasoning - that it does not trust Labor to properly conduct the sale or effectively use the proceeds - is merely a thin excuse to try to justify a purely political decision to give the Premier, Morris Iemma, and the Treasurer, Michael Costa, a bloody nose.
The Premier was right when he said yesterday: "Barry O'Farrell has today put political point-scoring ahead of the state's future. His fiscal irresponsibility and contempt will never be forgiven by the community and does nothing to address the impending lack of electricity capacity."
For Mr O'Farrell, it will seriously damage his relationship with the business community, which has been vocal in its support of the sale. Just how deep that divide runs will be tested in a couple of years when the Liberal Party asks business to help bankroll its election campaign. Who could blame them for denying the party funds?
For Labor, it once again reminds the people of NSW that it is the public-sector unions that pull the strings of the Government. To their great credit, the Premier and Treasurer sought to stare down the power workers and their party puppets, most notably and theatrically at the ALP state conference. But in the end, the union pressure on Labor backbenchers to cross the floor and vote against the Government made it necessary for Mr Iemma and Mr Costa to seek the support of the Coalition.
Mr O'Farrell has failed his first leadership test. He will cost the state dearly - and deserves to be reminded at every turn between now and the next election.
More than a decade ago, Victoria's visionary Liberal Kennett government got on with the business of privatising its power assets. It can be argued that the timing of the sale delivered top dollar for the assets, attracting as it did an auction involving global energy players. Given the uncertainty associated with an emissions trading scheme, it is true to say that NSW's assets would not now deliver such a windfall. But the Victorian sale was as much about declaring the state open for business after years of financial mismanagement in the Cain-Kirner Labor era.
If only Barry O'Farrell had seen the light. Dark days, indeed.
©2008 Copyright John Fairfax Holdings Limited. www.smh.com.au
The Sydney Morning Herald
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