Privatisation, 80s style
I haven’t had time for a detailed analysis of the Iemma government’s proposed privatisation of the NSW electricity industry, though what I saw of the Owen report suggested that the case was weak.
Fortunately, the announcement that the sale will .help pay for a “new vision” for urban transport, a European-style metro rail line, better country roads and improved water management.’ tells us everything we need to know. The quotes in that link should be around “pay for”, not around “new vision”. There is no meaningful sense in which selling an income-generating asset allows you to pay for anything. The sale price merely offsets the loss of income.
As a matter of public policy, either a metro rail line is a good investment or it isn’t. Whether or not electricity assets are sold can make no difference to this. However, lots of evidence suggests that when people get money that they can regard as ‘free’, they generally squander it.
This is all set to be a repeat of the 1980s and 1990s privatisations when the proceeds of asset sales were sprayed against the wall (I’ve slightly bowdlerised the picturesque description offered at the time).
Following on from the Cross-City Tunnel fiasco, the Labor government in NSW is cementing its reputation as the country’s worst fiscal manager.