Michael Costa

Contents: O'Farrell pilloried, Parliamentary debate ignored, Earlier misreporting: Iemma exhorted to ignore Labor conference, public will, What can be done about this?.

Analysis of the reporting of electricity privatisation initiatives in New South Wales brings disturbing confirmation that the major Australian newsmedia does not accurately report essential facts on issues of vital concern to us. Indeed, it often acts as a conduit for propaganda against our best interest.

Throughout NSW's struggle against a push to privatise electricity, barely any of the newsmedia paid regard to the fact that the NSW Government had no mandate whatsoever to sell electricity assets. Facts acknowledged in hardly any of the reports included:

• In the face of relentless propaganda in favour of privatisation, opposition to privatisation stood at between 79% and 86% according to opinion polls.
• Morris Iemma had explicitly promised not to privatise prior to the March 2007 elections.
• In the 1999 state elections NSW electors voted against the Liberal/National Opposition which stood for full privatisation.

O'Farrell pilloried

On 27 August, the day before the privatisation legislation was to be put before the NSW Upper House The Australian's Imre Saluzinsky shared with his readers his high expectations of NSW state parliamentary Liberal Party and leader of the state Opposition Barry O'Farrell in his article of 27 August "O'Farrell won't do a Debnam". There were, of course, those in the Liberal party opposed to privatisation, who were described by Saluzinsky, incredibly, as, at once, both "machiavellian" and "conspiracy buffs to the bitter end" who apparently had paranoid delusions that Labor would use the proceeds of the sale to pork-barrel their way back into office in 2011. Nevertheless, he predicted that O'Farrell and the Opposition would come good:

O'Farrell can either outsmart himself with such conspiratorial thinking, or demonstrate the Coalition is ready to govern. On previous form, he'll choose the latter path.

In response to this article, one reader responded:

Where does political morality lie in your equation, Imre? Both major parties ruled out power privatisation before the last election, and merely months later it becomes a 'must do'? Through their mismanagement Iemma and Costa need the money from the power sell-off for their political survival. Handing them the keys to the vault by aiding and abetting their political fraud will only prolong an inept Labor government. That is the reality facing the entire business community in NSW.

Saluzinsky did not answer.

When Barry O'Farrell failed to follow Saluzinsky's script, two days later Saluzinsky turned on him with a vengeance. On Friday 29 August in "O'Farrell's shame worse than Iemma's", He wrote:

The collapse of the latest reform push is a condemnation of the political class in NSW.

It shows the nation's largest state - over a third of the national economy - in the grip of reform paralysis. And it leaves the credibility of both Iemma and NSW Opposition Leader Barry O'Farrell in tatters.

... O'Farrell shifted ground. He sought independent advice, which backed the sale strategy, then he ignored it, preferring to maintain a united front with the Nationals rather than securing the state's electricity supply.

The Australian's editorial "NSW Labor and Libs are unfit for power" appeared critical of both the Government and the Opposition, however the latter was the main recipient of its venom. It began:

NSW Opposition Leader Barry O'Farrell has just done the unthinkable. By scuttling Labor Premier Morris Iemma's push to privatise the NSW electricity sector, he has raised the serious question of whether the Liberal and National parties can ever be fit to run the nation's largest state. After 13 years of do-nothing and scandal-soaked government from Labor, it is truly remarkable that the Coalition can't bring itself to support the one positive item on the Iemma agenda.

Here, the editorial writer is hardly being fair to the state Labor Government. Former Premier Bob Carr tried earnestly to foist electricity privatisation on the Labor Party in 1998 only to have it rejected by the Labor Party conference. In 2006 the Iemma Government attempted to lead the Federal and Victorian governments to privatise the Snowy Hydro scheme. Iemma could hardly be held to blame if the Howard Government, faced with a public outcry and the late Federal Independent MP Peter Andren's determined opposition, decided to pull out the rug from under privatisation. Clearly, in terms of The Australian's own world view, the Carr and Iemma governments had attempted to do other 'positive' things, which The Australian should have acknowledged.

This year, Iemma went one step further than Carr was prepared to go. He ignored the Labor Party conference vote. He also ignored public opinion and his own 2007 election commitment. What else, short of declaring martial law and jailing NSW upper house members opposed to privatisation, would the The Australian have had Iemma and Costa do?

The editorial goes on to ask, "And for what?"

Anyone placing their trust in the judgement and good will of the editorial writer would have gained the impression that O'Farrell had not provided any justification for his actions. In fact, he had supplied justification in a media release that day. Upper House leaders Michael Gallacher (Liberal Party) and Duncan Gay (National Party) both also provided reasoned and detailed arguments against the privatisation legislation in the Parliamentary debate before it was abruptly closed by an embarrassed Government.

Whilst the editorial was prepared to trust a Government it had itself labelled as 'inept', O'Farrell was not. In his media release, he wrote:

Furthermore, the Iemma Labor Government has an appalling record of dealing with the private sector ? it has failed the public in deals ranging from the Cross City Tunnel to the building of the new Bathurst Hospital.

Given their record of incompetence, Morris Iemma and Labor can?t be trusted to deliver a good result for taxpayers and consumers.

To many, these would seem reasonable concerns. In addition O'Farrell pointed out that there was uncertainty about the implications of the Federal Government's carbon trading scheme and that privatisation had not been put by Iemma to the NSW electors in 2007.

The editorial then moved on to stronger ground:

It is not even clear that Mr O'Farrell's obstruction passes the cynic's test.

Indeed, it had not. That test was being passed with flying colours by the editorial writer himself. The majority of the state Labor Party Parliamentary caucus, which had resolved to ram through the privatisation legislation in defiance of popular opinion, and the state Labor Party conference, has also performed exceedingly well in this regard.

In one small sense, the Opposition's stance may have been due to its instincts for self-preservation, if only because of the Murdoch press's own record of unprincipled opportunism. Had privatisation proceeded, it is hard to imagine that The Australian would not have quietly forgotten the Iemma Government's legendary incompetence and, instead, have begun to sing its praises once more.

The editorial writer then assailed the reader with facts and statistics that would have left him/her in no doubt that O'Farrell, or anyone else who may have wanted to hesitate for longer than five minutes before allowing privatisation to proceed, was stark raving mad.

[Because O'Farrell] "continues to ignore economics 101 ... the Australian would be unable to recommend a vote for a change of government in NSW."

This begs a number of obvious questions: If sound economic practice really required electricity privatisation, why couldn't the policy simply have been put to the electorate in March 2007? Why had it proven so hard to make the public, the trade unions and the NSW state Labor Party see this? Why had the public rejected privatisation in 1999 and remained adamantly opposed to it all along? Clearly neither The Australian nor Iemma deserved the public they had been stuck with.

Murdoch's Daily Telegraph editorialised on 31 August :

Mr O'Farrell ... also has a huge question mark hanging over his head after his performance last week.

...

Mr O'Farrell could not resist the lure of a cheap political victory to wound his opponent when NSW was crying out for some far-sighted leadership.

Presumably by 'NSW', the editorialist meant the small shrill chorus of bankers and investors.

O'Farrell and the NSW state Opposition received additional drubbings in reporting over the following days: "How the people of NSW were sold out" (SMH, 30 Aug) an opinion piece by Premier Morris Iemma. (A google search listed the story with a more provocative title: "How the power of one treacherous leader sold out the people of NSW". Clearly an editor somewhere thought better of that title), "O'Farrell backflip on power sell-off" (The Australian, 1 Sep)."Hopelessly devoted to self-interest" (Sun-Herald, 31 Aug), "O'Farrell's shame worse than Iemma's" by Imre Saluzinksy (The Australian, 29 Aug), "Luddite Liberals" (The Australian, Aug) by John Durie, "Barry O'Farrell misses a chance on electricity" (Sunday Telegraph, Aug. 08)

In Murdoch's Melbourne Herald Sun newspaper, one article, which seems to have since disappeared from the web, even referred to Barry O'Farrell as "O'Fool".

Against this torrent of condemnation O'Farrell was able to write an opinion piece on 1 September in defence of himself in the (Fairfax press) Sydney Morning Herald.

Parliamentary debate ignored

Astonishingly, even the debate in Parliament which had been recalled at a cost of $500,000 to the NSW taxpayer was ignored by electricity privatisation reporting. Facts revealed in the debate, but unreported in the media, included:

• Prior to the March 2007 elections "the Iemma Government issued emphatic denials that any such sale would take place". On 20 February 2007 Michael Costa stated "There are no plans to sell our retail electricity businesses". (Upper House Opposition leader Gallacher's speech)
• On 9 May 2007 Premier Morris Iemma, when referring to the Owen Review, ruled out any "sale of electricity generation, transmission or distribution."(Gallacher)
• In a Sydney Morning Herald article dated 25 May 2007 Iemma was reported as stating in a letter to Unions NSW that "The privatisation of the State Government-owned energy companies is not on our agenda".(Gallacher)
• On 23 November 2006 Michael Costa stated "There is no energy crisis in New South Wales - In fact, New South Wales has surplus energy."(Gallacher)
• Treasurer Michael Costa, as Secretary of the NSW Labor Council, had in 1998 and 1999 moved motions in opposition to former Premier Bob Carr's privatisation legislation(Gallacher)
• For 13 years up until the 2007 elections Treasure Costa and his predecessor Egan had boasted that NSW had healthy budget surpluses due to their sound financial management. "Treasurer Michael Costa told New South Wales taxpayers before the last election that they had nothing to worry about." (Gay)
• The Owen Inquiry report, which is the Government's principle justification for privatisation, has never been debated in the NSW Upper House. (Kaye)

In this light, why had the media not turned on Iemma and Costa, if it was truly concerned with reporting the truth?

Earlier misreporting: Iemma exhorted to ignore Labor conference, public will

Monday 5 May, 2008: The Australian's editorial "Rudd has a stake in NSW power sell-off", published after the NSW state conference voted 702 to 107 against privatisation, urges the NSW Parliamentary Labor Party to ignore the conference.

"Kevin Rudd has a lot riding on NSW Premier Morris Iemma's having the courage to defy Labor's state council and push ahead with the $10 billion privatisation of the state's electricity industry. To his credit, Mr Iemma says he is standing firm. ...

If electricity privatisation can be defeated because unions representing a few thousand electricity workers don't like it, how difficult would it be to stare down union interests to overhaul health and education?

...

The electricity debate is a classic example of the labour movement attempting to bully the government into making a decision that is not for the greater good. Mr Iemma must demonstrate that he is prepared to govern for all people and ignore the demands of state conference."

The editorial writer did not seem to have a problem with fact that 79%-86% of "all people" on whose behalf Iemma and Costa were supposedly governing, happened to agree with the "unions representing a few thousand electricity workers" and state conference.

7 May 2008: Murdoch's Sydney Daily Telegraph gloated at the Labor Parliamentary caucus's defiance of NSW public opinion in "Iemma's grin of victory over power industry sale":

"The rare record of an exceptional political victory came after Morris Iemma emerged from a post-conference meeting yesterday with the backing of his entire caucus for his plans to privatise the NSW power industry.

The Premier was so impressed by his coup - rendered by endorsements from even his rebel MPs as they filed out of the marathon meeting - that he celebrated by updating his Facebook site with the glowing new images.

'I'm very happy,' he said after giving a rare post-caucus briefing. 'There was nothing to vote on.'

An emboldened Mr Iemma then strode into Question Time and accused Opposition Leader Barry O'Farrell of being 'dumb', 'stupid', 'gutless' and having his head 'up his backside'".

Wednesday, 7 May: In a report "Iemma's caucus triumph" by Imre Saluzinsky and Andrew Faulkner, it was noted that Premier Morris Iemma's approval rating had dropped to 28%. Nevertheless the article confidently predicted:

"However, he is likely to receive a bounce in the polls from his display of strength in recent days."

In other words, the NSW public, would respect the 'strength' of a Government that had blatantly defied its will on the question of privatisation more than it would respect those who were intent on forcing Iemma to respect that will. This bizarre prediction was not realised and was quietly forgotten.

What can be done about this?

The material described and quoted above represents only a small fraction of many months of misreporting. Luckily the public weren't fooled this time. Luckily, a majority of their elected representatives also chose to represent their will in Parliament and to uphold basic principles of democracy and accountability, this time.

But it so easily could have turned out differently. More often than not such mass media misinformation campaigns have achieved their goals in the recent past.

It is in similar contexts that nearly all the other state governments in Australia have managed to privatise the people's electricity assets. It was in such a manner that Keating got away with privatising the Commonwealth Bank, despite a specific election promise not to. This is how all Australia's state-owned banks and insurance companies were privatised. This is how Howard got away with privatising Telstra. In the same way, Australia was dragged into the Iraq War, in spite of the most massive popular protests since the Vietnam War. This is how "Work Choices" was implemented and continues to dominate as law. That is how a slew of expensive, inappropriate and environmentally damaging infrastructure projects have been imposed against heated community objections in almost every part of this country. This is how successive governments have been able to impose high immigration levels on an uninformed and unwilling public. This is the way that local governments have been forcibly amalgamated in Queensland, NSW and Victoria.

It is time we challenged the right of newsmedia proprietors to act so blatantly against our interests.

If the newsmedia continue to serve the public so poorly, it must, itself, become the focus of popular protests, and progressive pro-democratic political parties must pledge to legislate to prevent the newsmedia from continuing to abuse their powers in this way.

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Also published on webdiary.

NSW Greens leader John Kaye defends Opposition leader Barry O'Farrell. O'Farrell and the NSW Opposition are now under concerted attack by the corporate sector and their newsmedia for having blocked Treasurer Costa's privatisation legislation in accord with the wishes of over 80% of the NSW public last Thursday.

See also: Iemma dodges his own $42 billion debt bomb (SMH, 1 Sep) by Barry O'Farrell, Mike Baird should make his move now - Online Opinion forum discussion about pro-privatisation state Liberal MP Mike Baird, now the darling of the corporate newsmedia.

What you can do: Join FaceBook site Support Clean Energy NOT Privatisation of NSW Electricity run by NSW Liberal MLA Peter Debnam. Peter Debnam's statement on privatisation can be found here and is also appended to this article.

O'Farrell pointing in right direction on sell-off while Baird losing plot

Media release: 31 August 2008

NSW Opposition Leader Barry O'Farrell's decision to stop the privatisation of the electricity generators is sound public policy, according to Greens NSW MP John Kaye.

Dr Kaye said: "Even from the standpoint of the Coalition's economic philosophy, passing NSW Treasurer Michael Costa's power sell-off legislation would not have been in the public interest.

"While Mr O'Farrell is being attacked by his friends in the business lobby, his focus on managing electricity demand would result in lower household energy costs and reduced greenhouse gas emissions.

"Unfortunately the Opposition's Energy and Finance Spokesperson Mike Baird appears to have fallen for the myth that this state needs more baseload generation capacity.

"Even though Mr Baird is now lining up behind the Opposition's official stance opposing the sell-off, he has clearly failed to understand that the Iemma government has been badly misleading the people of NSW.

"He should cast a critical eye over Treasurer Michael Costa's arguments.

"Whether it is to balance the state's books or to attract private capital into baseload power, whatever today's rationale for the sell-off is, it does not stack up.

"Mike Baird should also take a closer look at Mr Costa's declaration of war on the public sector.

"The power sell-off is only the opening gambit in a plan to devastate the delivery of public services and infrastructure in this state.

"Not only will this receive a deeply hostile reaction from the voters but it also makes no economic sense.

"Treasurer Costa is completely out of control and headed on a collision course with common sense.

"Mike Baird should do his duty as an Opposition spokesperson. He should join with the Greens, rebel Labor MPs, the union movement and the majority of his own party to block this potential disaster," Dr Kaye said.

For more information: John Kaye 0407 195 455

See also: Iemma dodges his own $42 billion debt bomb (SMH, 1 Sep) by Barry O'Farrell.

What you can do: Join FaceBook site Support Clean Energy NOT Privatisation of NSW Electricity run by NSW Liberal MLA Peter Debnam who resigned from the Liberal Front bench because at the time he considered that the stance by Opposition Leader against privatisation was not sufficiently strong. Peter Debnam's statement on privatisation can be found here and is also appended to this article.

Appendix: Electricity privatisation statement by Peter Debnam MP - 12th may 2008

Original statement published on www.peterdebnam.com.au

I have been opposed to Michael Costa’s Electricity Privatisation and despite lacking the numbers in Parliament to stop it, I’ve argued for the Coalition to take a strong stand against the privatisation and in favour of clean renewable energy. However, in my view, the conditional acceptance announced late last week by the Coalition effectively surrenders to Costa’s Privatisation.

Given my strong views, it is untenable for me to continue as the Shadow Minister for Energy and remain on the frontbench simply biting my tongue. As a result, on Friday I advised Barry O’Farrell that I will sit on the backbench when Parliament resumes this week and I understand Barry will today announce frontbench re-arrangements.

While stepping down from the frontbench, I will continue in Parliament until at least the 2011 state election and I will do everything I can over the next three years to aggressively hold this hopeless Government to account and get rid of them.

I will also work to expose the fraud of Costa’s Electricity Privatisation and, whether the Privatisation proceeds or not, I will promote the enormous opportunity for NSW to embrace and export the technology of Clean Renewable Energy – especially solar.

I describe the Privatisation as Costa’s because it is not a Labor Plan and the Premier is little more than an occasional mouthpiece for Michael Costa on this issue. Most of the grassroots Labor Party (not just the unions) oppose Costa’s Privatisation. They along with the community of New South Wales have been betrayed.

As I did, Morris Iemma went to last year’s state election, assuring the community that electricity would NOT be privatised. It was clear at that time there was no need for privatisation. It is only since the election, we have the seen the Premier and Treasurer’s increasingly hysterical claims that electricity must be privatised or the sky will fall in. The reality is that nothing has changed since the election other than the votes are in the ballot box for another term.

But less than a week AFTER the election, while I was still Opposition Leader, I was being lobbied by sections of the media to support Michael Costa’s electricity privatisation.

During the election campaign, I confirmed on several occasions that the NSW Coalition would NOT privatise electricity and noted there are more pressing issues other than ownership to be addressed - including the structure of the industry to attract private investment (not simply flog off current assets) and the need to transform the industry to clean renewable energy and to pursue energy efficiencies.

Indeed, we proposed significant changes in our 2007 Election Policy “For Future Generations – A Plan to protect the Environment and tackle Climate Change.” That policy included not only a 20% Renewable Energy Target by 2025, but also investment in solar water heaters for homes and schools and funds to support the development of Australia’s first large-scale solar generator in northern NSW. Those initiatives were well received.

I remain opposed to Costa’s fire-sale of assets which is simply to find more money for the Iemma Government to splash around in the next election campaign - with the added expense of handing over more than $100 million in fees to merchant banks participating in the Costa Privatisation.

Contents: Power retail sell-off plan punishes households and environment, Costa, Iemma must resign over back-door sale move, Costa's cowardly retreat from stunt gone wrong, speech by Dr John Kaye, speech by Sylvia Hale.

Power retail sell-off plan punishes households and environment

NSW Premier Morris Iemma's refusal to accept the will of the parliament and people of NSW is undermining the state's ability to reduce greenhouse gas emissions, according to Greens NSW MP John Kaye.

Dr Kaye said: "Public ownership of electricity retailers is just as important as the generators.

"In a time of rising wholesale energy prices, privately-owned retailers will treat households as cash cows.

"Privatisation will destroy important opportunities for demand management that can control increases in electricity bills and reduce greenhouse gas emissions.

"The Premier has treated the people of NSW and their parliament with complete contempt.

"He has allowed himself to yet again be bullied into an unpopular and undemocratic move by his Treasurer.

"NSW is in the grip of climate sceptic Michael Costa and his obsession with privatisation.

"At a time when reducing emissions is moving from being a personal commitment to becoming a national imperative, selling off the retailers will make it much harder to share the burden of climate change fairly.

"It is not surprising that the big business lobby has invested heavily in peddling privatisation.

"They are not just pushing the sell-off to help their mates in the banking industry skim off massive profits from the sale.

"They are making sure that when prices do rise, the costs will be born by households, not the big commercial and industrial consumers.

"NSW needs a Treasurer and a Premier who put the needs of the community and the environment ahead of the greed of big business," Dr Kaye said.

For more information:

NSW Greens Media release: 29 August 2008

Contact: John Kaye 0407 195 455

Costa, Iemma must resign over back-door sale move

The eleventh hour move by Morris Iemma to sell off electricity retailers after privatisation had been declared 'dead and buried' is a complete abuse of parliament, according to Greens NSW MP John Kaye.

Dr Kaye said: "The Treasurer has misled parliament. Michael Costa has no credibility and must resign.

"Michael Costa directly told the NSW Upper House that any sale would be determined by the parliament.

"He and his Premier have dishonoured the Westminster system.

"Premier Iemma’s manufactured excuse for the back-door sale is ludicrous. The so-called crisis in credit ratings comes from nowhere and is not believable.₁

"The capital markets should know that the Greens will work with the unions to undo this commitment to sell the retailers.

"The Premier has swapped excuses in midstream. This was supposed to be about encouraging investment in power generation. Now we are told it is to solve an alleged credit crisis.

"The government has no mandate to sell the state’s electricity assets.

"The utter contempt they are showing for parliament, the people and the democratic process has brought NSW politics to a new low," Dr Kaye said.

(NSW Greens Media Release: 05:12 pm 28 August 2008)

For more information John Kaye 0407 195 455

Costa's cowardly retreat from stunt gone wrong

The move by the Iemma government to delay the inevitable defeat of power privatisation after squandering money on a parliamentary recall will destroy its credibility, according to Greens NSW MP John Kaye.

Dr Kaye said: "Michael Costa has condemned his privatisation to a coward's death.

"The Treasurer's henchmen in the Legislative Council manipulated the parliament process because they know the lies and propaganda behind his privatisation push would not withstand scrutiny.

"The community will be furious that the Iemma government has squandered their money on a parliamentary recall that achieved nothing.

"When parliament reconvenes in late September the Greens will ensure that the Treasurer's sell-off plans receive the scrutiny they so richly deserve.

"We will work with the Coalition and responsible Labor MPs to deliver the final defeat to Costa's privatisation legislation.

"If this government tries to bring in privatisation by the back door using ministerial powers then the community will come after them.

"The obligation is now on Morris Iemma to tell the people of NSW that electricity privatisation is dead on arrival.

"Michael Costa should now do the right thing and resign," Dr Kaye said.

(Source: NSW Greens Media Release: 02:53 pm 28 August 2008)

Speech to NSW Parliament by Greens MLC Dr John Kaye on the issue of Privatisation of Electricity

*Dr JOHN KAYE *[1.22 p.m.]: I join with the Deputy Leader of the Opposition in opposing the motion for adjournment. It is an act of total cowardice to avoid debate on a central plank. Treasurer Michael Costa and Premier Morris Iemma have said that the vote on the electricity industry privatisation legislation was the most important single vote to be taken in this Parliament. But what did the Labor Iemma Government do? It ran away from the vote, and it seeks to hide from the inevitable defeat that this bill would have inflicted. Why did the Government do that? It knows that 80 per cent of the New South Wales population is opposed to electricity privatisation. The Government knows that 80 per cent of its own party is opposed to electricity privatisation, and it knows that every sensible and independent observer of the electricity industry agrees.

Handing public assets into private hands would be a complete and total disaster. To adjourn the debate is simply an attempt to avoid inevitable humiliation. It must be accepted now that the Costa-Iemma electricity privatisation is dead in the water. And it is dead in the water without appropriate debate and vote, and they have inflicted a cowardly death on the legislation. I note that Minister Kelly is now leaving the Chamber; he is embarrassed by what he had to deliver for the Costa-Iemma Government, and embarrassed by his failure to allow the bills to be debated appropriately.

The underpinning of privatisation was the Owen inquiry. The Chamber has not had the opportunity to debate the Owen inquiry, or the opportunity to determine whether the State needs new baseload capacity. The Chamber has not had the opportunity to test the presumption that we cannot afford to buy new baseload capacity, or to test the assumption that the private sector will not invest in the New South Wales electricity industry as long as it is publicly owned. As long as those assumptions are not tested in this Chamber, the Owen inquiry remains a document of propaganda and ideology. The Government lacks the courage to allow that document to be subjected to the scrutiny of the New South Wales upper House. In doing so, the Government denies the people of New South Wales the debate that Michael Costa and Morris Iemma promised them.

For the past 12 months, Premier Iemma and Treasurer Costa said that there would be debate on the privatisation of the electricity industry, but that has now been denied us. If Premier Iemma and Treasurer Costa sneak away from this Chamber and try to privatise the industry behind closed doors, this Chamber will go after them as will the New South Wales union movement---the activists who have campaigned long and hard against privatisation---and 80 per cent of the New South Wales population who are opposed to it. We will find whatever rock they will hide under, and we will make sure that they pay the price for selling off assets.

It is time this Chamber had a debate about privatisation. We will make sure when the Chamber resumes that that debate is held; it has to happen. The Government cannot run the propaganda and lies in the media that have been heard from Michael Costa and Morris Iemma and not conduct that debate in this Chamber. Adjourning the Chamber now will not avoid debate at a future time. The Government has extended the agony for itself. The Government does not have the majority in this Chamber---the media and the people know that. People who have campaigned against privatisation know that, and Government members know that full well. Running away and hiding will not destroy the evidence that power privatisation was always going to be bad for the people, bad for households, bad for the economy and bad for the environment.

It remains absolutely true that the Government cannot continue down the path of spreading myths from Tony Owen that have been propagated by the Business Council of Australia, the Alliance for a Better New South Wales, the business lobby and the Premier and the Treasurer. The Government cannot keep relying on those myths unless it is prepared to hold debate in this Chamber; if it is not, it will have no public credibility. By hiding from this debate, all it has done is guaranteed that the people know what is really going on. The Government will not stand up to the scrutiny of this Chamber; and it cannot, because what it is doing is a complete and total tissue of lies. If debate on this matter is not listed for when the Chamber resumes on 23 September 2008, we will have to take matters into our own hands to ensure that it is held. The Greens oppose the adjournment.

Speech by Greens MLC Sylvia Hale to NSW Parliament on issue of Privatising Electricity

Ms SYLVIA HALE [1.32 p.m.]: Two years ago this Government attempted to privatise the Snowy Hydro scheme. That time it was saved from itself by a statewide campaign of opposition that made it clear that privatisation was unacceptable to the community. Protests and opposition started in the Snowy region and spread across the State, from village to town and into the cities. The State Government tried to tough it out, but ultimately the Federal Government's withdrawal from the process forced the hand of the State Government, which then withdrew from its attempted privatisation of Snowy Hydro. That decision was significant in saving the Government at the subsequent State election in March 2007.

Unfortunately, the State Labor Government has wilfully chosen not to learn from its mistaken attempt to sell Snowy Hydro. In 2008 the New South Wales Labor Government is determined not to save itself. It is so determined to thumb its nose at the people of New South Wales who overwhelmingly oppose privatisation that it took the extraordinary step of recalling Parliament to try to push through its bills. It has now taken the extraordinarily cowardly step of adjourning Parliament rather than face a defeat on the floor of the House. The Government has lost its commitment to the best interests of the residents of New South Wales, its ability to read the electorate, and its instincts for self-preservation. In the face once again of statewide community opposition, the Government appeared initially determined to push ahead with a privatisation proposal for which it has no mandate and to which the vast majority of the people of this State is opposed.

In the face of overwhelming opposition from the community, from the trade union movement and from its own rank and file members, why is the New South Wales Labor Government so keen to tread this self-destructive road? Many people in New South Wales will look at what has happened today and wonder what the Labor Party has become and whose interests it now serves. It appears that the leadership of the parliamentary Labor Party has determined that the future of the New South Wales Labor Party is as the party of big business. It has deliberately turned its back on its own members, on the trade unions and on the community generally in order to embrace the agenda of the State's large corporate interests.

It was instructive this week to see the pro-privatisation urgings of the corporate sector being led by the so-called Alliance for New South Wales' Future. This is the latest front group set up by the head of the Property Council, Ken Morrison, and his corporate lobby group mates. The last such group Mr Morrison fronted was the Coalition for Planning Reform. That was the group whose wish list formed the basis of the Government's deeply unpopular changes to the planning system—changes that, like the privatisation proposal before us, pretty well every Labor candidate in the upcoming local council elections is trying to disown. All these various coalitions and alliances that Mr Morrison fronts are supposedly motivated solely by the best interests of the residents of New South Wales, and their members become deeply offended by any suggestion that they are merely pursuing the financial interests of the corporations that make up their membership. They may claim public altruism, but there is no doubt that they are really lobbying in the financial interests of the big end of town. That is fair enough; it is what their corporate sponsors pay them to do.

What is disturbing, however, is the extent to which the so-called Labor Government has embraced the agenda of these corporate interests. One can hear the eager, servile capitulation of the Premier, the Treasurer, and the Minister for Planning: "Rewrite the planning laws the way you want them? Certainly, Mr Morrison. Hand the State's electricity assets over to the corporate sector? Of course, Mr Morrison". I do not know why Labor does not simply appoint Ken Morrison as Premier and cut out the middleman! The policy outcomes would be the same. The relevant bills were introduced in the lower House on the same day that Frank Sartor introduced his developers' wish list of a planning bill. This demonstrates clearly and finally for all to see that Labor's parliamentary leadership has turned its back on its rank and file members and its trade union base in order to fall into the loving embrace of the corporate sector that now funds its election campaigns and sets its policy agenda. As with Snowy Hydro, from the outset the Greens have opposed the privatisation of the State's electricity assets. We are united in our condemnation of the Government's pro-privatisation agenda.

Footnotes

1. ↑ On pages 257-259 of Naomi Klein's "The Shock Doctrine" there is a narrative of another manufactured credit crisis in Canada in 1993:

In September 1995, a video was leaked to the Canadian press of John Snobelen, Ontario's minister of education, telling a closed door meeting of civil servants that before cuts to education and other unpopular reforms could be announced, a climate of panic needed to be created by leaking information that painted a more dire picture than "He would be inclined to talk about". He called it "creating a useful crisis."(p259)

See also: NSW electricity privatisation can be stopped!, Open letter to NSW state Opposition members urging a vote against electricity privatisation, Open letter to NSW Labor parliamentary caucus members to urging a vote against electricity privatisation

The recently released NSW Auditor-General's report supposedly gives the green light to the NSW Government's electricity privatisation legislation. NSW Premier, Morris Iemma, has seized on this and has announced that he may recall the NSW Parliament as early as next week in order to rush through the privatisation legislation.

The actual words from the report (pdf, 354K), which NSW Premier Morris Iemma claimed as a "stunning endorsement" of his government's plans were "... nothing has come to my attention that causes me to believe that the Government's strategy for the transfer of assets to the private sector ... is not appropriate for maximising financial value for taxpayers."

These read like weasel words, intended to satisfy the political needs of the Iemma Government whilst maintaining a facade that the Auditor General has fulfilled his responsibilities to hold the Government accountable to the NSW public.

A condition imposed by the Auditor-General, which superficially appears to pose a hurdle to privatisation, is that a confidential reserve price for each electricity generation asset to be sold be arrived at. If, for any one asset, the bids fail to exceed that asset's secret reserve price, that asset's sale is to be scrapped. One "of the factors used to determine the reserve price for each transaction" is to be the asset's 'Retention Value'. The report doesn't specify what other factors are to be used in determining the reserve price.

The A-G's report describes the 'retention value'.

The Strategy Document outlines the intended approach to be adopted to estimate the value of the businesses under continued Government ownership. This approach values the projected future dividends from the businesses and projected corporate taxes paid by the businesses which are ultimately received by the State under the Tax Equivalent Regime. The projections should reflect the expected performance of the businesses under continued Government ownership taking into account any impact of Government ownership on the businesses’ growth strategy, capital structure and performance. The projected future dividends and tax payments should be discounted at an appropriate cost of equity reflecting the risks associated with the projected cash flows.

From the point of view of accountability and the public interest, there are a number of problems:

• The 'retention values' were unspecified.
• What is to stop the NSW Treasurer from applying 'factors' other than an asset's 'retention value' in order to reduce the reserve price?
• The process requires, on the one hand, concealing from the NSW public the calculated retention values, whilst, on the other hand, relying on those managing the sell-off to keep that knowledge from the intending purchasers.
• The 'retention value' is defined only in the narrowest financial terms. For example, it appears to accept shifting of costs, previously borne by publicly owned corporations, onto the public as a legitimate means to favorably assess comparative performance of the privately owned utility. One example of cost-shifting typically employed by privatised corporation is the reduction in on-the-job training of its staff.

In other ways, the report helps expedite privatisation. It states:

... it is in the interests of investor confidence and bearing in mind the long lead times for developers to physically obtain generation equipment, that any uncertainty relating to the proposed restructure should be removed as soon as possible.

The report also takes issue with the five year employment guarantee to current NSW electricity employees:

Based on information provided by Treasury, the planned measures for the proposed employee protections are generally consistent with other privatisations and Government restructures, except for the employment guarantees. A five year employment guarantee for certain Generator employees exceeds such guarantees in previous privatisations and restructures, which were for three years or less.

From the A-G's objection to the five year employment guarantee which he implies is excessive, we can see that he unquestioningly accepts the prevailing economic orthodoxy which is that the greater propensity of private owners to shed jobs is a factor in favour of private ownership.

Whatever can be said of the report, it fails to clearly demonstrate, as the NSW public who paid for the report are entitled to know, whether or not privatisation is in their best interests. It admits that its parameters are confined to dollar projections in the narrowest sense, and does not consider factors beyond this - notably democracy.

The fate of NSW's electricity assets, paid for over recent decades by the NSW public with taxes and through electricity bills, should not rest on such an obviously limited and deficient report.

Democracy disregarded

The NSW public, the rightful owners of the electricity assets, have consistently and emphatically shown their opposition to the sale. In the 1999 elections where they resoundingly voted against the NSW Liberal/National opposition which stood on a platform of full privatisation. The latest poll showed 79% opposition to the sale. An earlier poll showed 85% opposition. The NSW state Labor Party Conference, wholly consistent with the feelings of the broader community, voted 702 to 107 against privatisation, but was subsequently ignored by the NSW state Labor Parliamentary Caucus.

The plans to privatise were never put to the NSW public during the 2007 elections. As it is impossible to believe that privatisation had only occurred to Iemma and Costa since the election, it would appear that they deliberately concealed their intentions, knowing that they would have been rejected.

If democracy in this country is to have any practical substance whatsoever, then the NSW government has no mandate to proceed with the sale.

Given that the Iemma Government may well have the numbers on the floor, how is it possible for the NSW public to prevent this brazen theft from proceeding?

The public have already made it clear they don't support privatisation of electricity

As the Vietnam Moratorium and many other popular protest movements have demonstrated, Parliament does not always get its way when it is so far removed from the will of the public.

The most effective way to block privatisation would be for the Electrical Trades Union (ETU), members of which stand to lose the most should it proceed, to carry out their threat of industrial action. In all likelihood the ETU would not even need to carry out its threat. If it were simply made clear to the Iemma that, unless privatisation is abandoned outright, or the legislation put to the NSW public either through a referendum or at the next election, it will proceed with industrial action, it is hard to conceive of how this could not enjoy the overwhelming support of the NSW public and and it is hard to concieve of how Iemma, faced with such an ultimatum could see any alternative but to agree.

Whether or not the ETU decides to pursue this course, all parliamentary representatives must be held to account for their actions. As hardly any who have voted in Parliament for privatisation, least of all the Labor representatives, are acting in accord with the will of their constituencies then their constituencies have every right to have them replaced by others who will. In the case of the NSW Labor Party, whose will has also been ignored, simply supporting those few Labor members who have voted against privatisation is hardly sufficient. They should not hesitate to disendorse each and every member who have voted for privatisation, starting from Morris Iemma and Michael Costa. Given the generally appalling record of the Iemma Government and its abysmally low popularity, this would seem, in any case, to be the only realistic chance that Labor would have of retaining government in NSW in 2011.

If the public don't endorse the sale it can be revoked later on

However, the most important measure that should be adopted by those now fighting privatisation is to clearly warn those intending to buy NSW's electricity assets that they have no right to do so and be resolved to both remove from office all those who are pushing privatisation and to renationalise those assets.

All those who intend to buy NSW's electricity assets in open defiance of the will of the NSW public must be told in no uncertain terms that once a government, which is representative of the NSW public, comes to power, that they, and not the NSW public, will be made to bear the cost. Whatever costs, which were were illegitimately imposed on the NSW public in the course of privatisation and whatever further costs are necessary to renationalise those assets should be discounted in full from the money paid for the repurchase of these assets.

If this were stated clearly now, then they won't be able to say that they weren't warned.

Update: Kelly denies Govt considering Snowy Hydro sell-off from ABC Online News 11 Jul 08 (see below)

The Canberra Times has reported that the Rudd Labor Government is now planning to acquire the Snowy Mountains Hydroelectric Authority in order to privatise it. This is in spite of fierce public opposition which forced the previous Howard Government to abandon its own privatisation plans and Rudd's own pledge before the 2007 elections to keep it in public hands.

The Rudd Government maintains that it is "opposed to outright privatisation as such''. Instead, it plans to lease the Snowy Mountains Hydro-Electric Corporation to private industry. However, as NSW anti-privatisation campaigner Greens MP John Kaye pointed out in a media release of 10 July, "There is no practical difference between Kevin Rudd's long term lease and John Howard's sell-off. Both would see control of the water in the scheme pass out of public hands to large multinational corporations."

John Kaye has warned that if NSW Treasurer Michael Costa succeeds in the privatisation of NSW's electricity assets, in the face of the strong opposition of 79% of the NSW public, that the Rudd Government may well feel encouraged to proceed with the sell-off of the Snowy Hydro.

According to the Canberra Times, the, by now, wholly familiar rationale for privatisation has been offered, that is, that it has to be privatised in order for the $800 million in investment said to be necessary can be raised by the private sector. No reason as to why the money couldn't, instead, simply be raised directly by the government either from general revenue or through loans was offered.

An impetus to privatisation also come unexpectedly in last week's Climate Change Review Draft Report. The report made the claim that ownership of the Snowy scheme by three governments NSW, Victoria and the Commonwealth could restrict future development and competitiveness in the national electricity market.

However, local community opponents to privatisation pointed out that Garnaut had paid no regard to the fact that the Snowy Hydro was a regulator of water. As former chief engineer with Snowy Hydro, Max Talbot, had written in a letter to the Prime Minister earlier this year after hearing that privatisation was being considered, Snowy Hydro was ''worthless as a business'' without its water licence.

''The licence is weighted towards the use of water for electricity production and trading rather than optimisation of the use of the water as an invaluable resource for irrigation, communities and the environment.

''It does not adequately regulate Snowy Hydro and contains compensation clauses that would result in the payment of hundreds of millions of dollars by governments to private owners should the licence need to be amended during its 75-year term.'

So if privatisation, in the guise of a long term lease were to proceed, the Australian community may be faced the unpalatable choice of forgoing vitally needed water or paying prohibitively for an breach of contract to the private operators of the Snowy Hydro.

Alpine Riverkeepers spokeswoman Acacia Rose was also critical of the Garnaut report's comments on privatising Snowy Hydro.

''The Snowy scheme is vital for water security and must be re-positioned for water storage and management despite the recommendations of Garnaut that focus primarily on energy generation,'' she said.

With diminishing rainfall for south-eastern Australia there will be less water available for energy generation.''

The fact that Ross Garnaut has so inappropriately used his authority to promote privatisation when privatisation has had such a disastrous track record and when it has been so emphatically opposed by the public, may be cause to question his preference for market forces, even if operating within the constraints of his carbon credits trading scheme, as the solution to global warming.

Update

The ABC reported on 11 July that Federal Member for Eden-Monaro Mike Kelly has put an end to speculation that federal Labor has done a backflip on its opposition to privatise Snowy Hydro.

In response to the abovementioned Canberra Times article Mr Kelly said that his Government has not changed its opposition and he stands by his election pledge to keep the corporation in public hands.

He claimed that the Canberra Times report was misleading.

Comment: The report didn't account for the inconsistency between the Federal Government's support for the privatisation of NSW's electricity and its professed opposition to the sale of the Snowy Hydro.

Appendix: Media Release for John Kaye, NSW Greens MLA

NSW power sell-off would renew Snowy Hydro privatisation push

10 July 08

The Iemma government's attempt to sell the state's electricity industry has become a test case for privatising the nation's largest hydro-electric and irrigation scheme, according to Greens NSW MP John Kaye.

Commenting on a story on page 1 of today's Canberra Times (''Snowy power may go private'

), Dr Kaye said: "Federal member for Eden-Monaro Mike Kelly has let the cat out of the bag.

"The Rudd government is carefully watching NSW Treasurer Michael Costa's push to sell off the state's retailers and generators.

"According to Mr Kelly, if Treasurer Costa is successful, the Commonwealth government will implement their secret plan to take over the Snowy and lease it out.

"It looks like a reincarnation of John Howard's privatisation plans that came to a sticky end in 2006 after massive public opposition.

"There is no practical difference between Kevin Rudd's long term lease and John Howard's sell-off. Both would see control of the water in the scheme pass out of public hands to large multinational corporations.

"The ante on the NSW sell-off has just been upped. The Iemma government's proposed sell-off is an environmental, social and economic disaster. It just got worse.

"The issue is no longer confined to the state's coal-fired power stations and retailers. It now includes Snowy.

"The state member for Eden-Monaro, Steve Whan, needs to get onto the phone to his federal colleague and reiterate the arguments he used in 2006 to oppose the sell off.

"No doubt Mr Whan will now be regretting his support of the Unsworth Inquiry recommendations to sell off the state's power industry.

"He will not be happy to see he has unwittingly become part of a renewed push to privatise Snowy.

"Mr Whan knows that this will be even more detested in his electorate than the already deeply unpopular power sell off," Dr Kaye said.

For more information: John Kaye 0407 195 455