Costa’s catastrophe

A catastrophe like the one that befell the NSW Labor Party at the weekend can scarcely be attributed to a single individual, and indeed there were many contributors. But one person stands out above all others as deserving of credit or criticism – former Treasurer Michael Costa. Having risen through the trade union movement, he made his bones in Parliament as a union-busting Transport Minister. Appointed by the utterly hopeless Morris Iemma as Treasurer, he persuaded Iemma to privatise the electricity industry, in direct contradiction of the platform on which Labor had campaigned, and the previous repudiation of privatisation by NSW voters.

As the massive unpopularity of similar moves in Queensland had shown, Labor was doomed unless it repudiated Costa, Iemma and privatisation. The party managed the first two, but, not unfortunately the third.

In keeping with his entire career, Costa quit the day he became eligible for a Parliamentary pension, and immediately emerged in his true colours as an open enemy of the labour movement and the Labor Party.

As I said at the outset, it wouldn’t be possible for one person to do this alone. While I find it hard to attribute any real agency to Iemma, he and/or the Sussex street machine that nominated him to the Premiership could have stopped Costa if they wanted to.

138 thoughts on “Costa’s catastrophe

  1. “and immediately emerged in his true colours as an open enemy of the labour movement and the Labor Party.”

    I think you are confusing what you want the Labor Party to be and what it is today.

  2. It ain’t just what John wants the Labor Party to be. Polling indicates that that’s what the majority of the people who usually vote labor also want.

  3. Dead right. However I wouldnt let Costa wear all the blame. Lets not forget Carr and Egan who really started the whole privatisation mantra all the while when they were rolling in stamp dutires (in fact became utterly addicted to overdevelopment policies and the formation of an intensely close relationship with residential developers who also poured donations into their pockets both for the party and their insider trading from it, by numerous labour mates and individuals associated with the ranks of NSW labor).
    All the while the approach towards vital infrastructure investment was hopelessly haphazard and piecemeal (with numerous failed PPS along the way). At least Obeid had the honesty to note their approach to transport was piecemeal recently…but it was sloppy, grossly inadequate and piecemeal for 16 years which is time enough for problems to deteriorate rapidly.

  4. “Polling indicates that that’s what the majority of the people who usually vote labor also want”

    Maybe, but at least in NSW, it appears the reality is that most would rather vote for a more right-wing party (the Libs) than a more left-wing party (the Greens, who gained very little), no matter what they say.

    Off hand, I can’t think of any Labor governments that are not centre-right economic rationalists and are not also socially conservative. When was the last one that wasn’t?

  5. PJK was busy on the telly tonight whitewashing the NSW right, despite repeated questions about the NSW disease spreading to Canberra he maintained that it was all union’s fault.

  6. You’ve got an excluded middle there, conrad. And you’re making a false assumption that NSW Labor was less right-wing than the NSW Libs.

    The majority of Australians reject the hard right. Keating, Kennet and now the NSW Labor right.

  7. Keating’s role is the NSW debacle was and is absolutely reprehensible. He was chairman of Lazard Capital, advisors to the NSW government on the electricity privatisation, and who was getting a success fee for the sale. He’s no elder statesman, he’s a money grubbing weasel.

  8. @conrad
    Conrad get over your pathetic ideology peddling…..enough people voted for Barry because they are fed up with the privatisations, lack of infrastructure investment ie traffic and health and if liberals want to constrict the NSW budget to starvation point with the mess we have now and pay homage to American ratings agencies whilst the traffic and electricity prices goes up the creek further – liberals will be thrown out as moronic incompetents too so If I was you Id go spout your silly jargon somewhere else.
    Die hard rusted on liberals like yourself are probably in the minority of who voted for OFarrell last Sat.. and we know now what can happen to rusted on voters especially when problems loom large.
    This is no time for your budget surpluses you idiot.

  9. @SJ
    Agree – Keating was the weasel who twisted Hawkies mind and everyone elses in Labor…not that some other things didnt twist Hawkies mind.

  10. Somebody should shout the prof a beer.
    Comments policy violation deleted. I’ll have the beer but please don’t post comments like this

  11. I met Costa briefly at what was essentially a libertarian dinner function a while after he left politics. Costa is basically a libertarian that refuses to wear the label because in his words it is an American import. He is a huge fan of Hayek (had a picture of him on his office wall) and thought most government programs were a waste of taxpayers money and described them as akin to theft. I really quite like his outlook although he is incredibly combative in conversation and I imagine he was hard to work with. The privatisation initiative under Iemma and Costa would have happened except that Barry O’Farrell decided to block it. This leaves me very sceptical about whether Barry O’Farrell will do much worth while reform. O’Farrell strikes me as little more than a political opportunist.

    Keating was on 7:30 tonight and he wasn’t blaming Costa. He was blaming the machine men who opposed privatisation

  12. “Die hard rusted on liberals like yourself”

    If only you knew what my real beliefs were before you started making assertions about my personal characteristics — this sort of thing reminds of Catallaxy commentators, except from the other side of the political spectrum (but same sort of attitude). I was just pointing out the reality of the situation. Personally, I think that NSW Labor is crap, and the only reason they stayed in so long is that the Libs were even crapper.

    “And you’re making a false assumption that NSW Labor was less right-wing than the NSW Libs”

    That’s possible — I haven’t kept up with the latest NSW governments since I stopped living there, but they wern’t as far right some of the delightful leaders the Libs had like Chikarovski.

    “The majority of Australians reject the hard right. Keating, Kennet and now the NSW Labor right.”

    They were all very successful (NSW especially so — 16 years in power) — and all governments fall eventually.

    You still haven’t answered my initial question incidentally, which I assume means you basically agree that the Labor party is now yet another right-wing rationalist machine and has been for quite some time.

  13. JQ – are you going to permit continued obscenities such as this:-

    No. As you may imagine, I don’t patrol the comments threads continuously, so the implication in “continued” is not welcome – JQ

  14. They were all very successful (NSW especially so — 16 years in power) — and all governments fall eventually.

    You still haven’t answered my initial question incidentally, which I assume means you basically agree that the Labor party is now yet another right-wing rationalist machine and has been for quite some time.

    Why continue with this silly narrative? The point at which the NSW Labor right went “hard right” is identified in this very post. Hint: it has something to do with Michael Costa.

  15. I’m not sure I’d characterise the NSW libs as more right wing than the NSW Labor party. That said I do live interstate and there is probably a bit I am missing out on. Please, if possible would someone with more knowledge on NSW politics be able to highlight some differences?

  16. If only you knew what my real beliefs were before you started making assertions about my personal characteristics — this sort of thing reminds of Catallaxy commentators, except from the other side of the political spectrum (but same sort of attitude).

    BTW, can you cut out this sort of whining? If you want to say something about your own “real beliefs”, you could just say something like: “My beliefs are x,y,z”.

  17. “Hint: it has something to do with Michael Costa.”

    I’m sure it does, but Michael Costa is only an individual. The fact of the matter is that it was a very successful political strategy for Labor to occupy the ground they did and push the Libs further to the right, and that’s no doubt one of the reason Costa was able to get where he is (because they wanted it). This was replicated to some degree all over Australia, and that’s now what the Labor party is, whether people happen to like it or not. Just look at how long Kruddy lasted once he started having ideas that didn’t conform to this, and look at what he was replaced by. No mining tax, victimize the most vulnerable, and even of the concessions made to this ideology, it’s hard to know what was done simply to placate the Greens and other members of parliament. It’s not just the story of the NSW right.

  18. While I probably disagree with TerjeP on almost everything else, I strongly support his comment above. I don’t find torture fantasies amusing – and the approach is redolent of what it rejects (cf Graham Richardson’s blowtorch)

  19. @conrad

    Our system is like the old joke about buying a Ford — you can haqve any colour — as long as it’s black.

    There’s absolutely no doubt that the vast majority of ALP voters and a fair tranche of non-committeds would like a more communitarian ALP than we have. That’s why Anna Bligh and Iemma both campaigned against privatisation and why their popularity nosedived when they went for it. At no point in the whole privatisation debate did those supporting it go above 30% and the ALP base was opposed to it by about 90%.

    When governments act in this way, not only do most people feel deeply troubled and disempowered and betrayed, but they act in the only way they can — they switch sides. O’Farrell seemed to be against it. Good enough. He’s now on notice. I doubt he will try it. That 36% swing in Bathurst — that was Lithgow declaring on what they thought of the deal.

    @TerjeP

    Costa is basically a libertarian that refuses to wear the label because in his words it is an American import. He is a huge fan of Hayek (had a picture of him on his office wall) and thought most government programs were a waste of taxpayers money

    I’d say his pension was a huge waste of taxpayers’ money, and I’m not even a rightwing libertarian. Then again, Costa plainly disagreed. He certainly came up with a suitable rightwing libertarian response to it.

    Costa quit the day he became eligible for a Parliamentary pension

    Plainly, the incentive to “work” (if that is the correct term for what he did) had entirely dissipated. Then again, perhaps he simply thought himself a waste of space. He was flattering himself if so, but in the right ballpark.

  20. SJ, I was just expressing my surprise that after the first thing I said (which I don’t think was rude or unreasonable), there was Alice to jump down my throat for it. As it is, I expect that from Catallaxy (it is so blokey after all), but usually most places are a bit more polite. And now your saying I’m whining. And people wonder why some blogs end up with 6 commentators that all agree with each other.

  21. Matt, with most aussie politics you get right and then you get further to the right. Its just that it happens in Sydney before percolating through to the rest of the country. To do with globalisation and dumbing down.
    I’ll pay Terje the compliment of being accurate in his description of Costa, but wonder how he could imagine this could be attractive to ordinary people since we move to a corporatist “command”economy such as happened in NSW, with the corporatists and their closed circle.
    But more importantly, I’d ask Terje where all this (conspicuous)”theft” that so troubles him, actually begins, when it is built on the “theft”of opportunity for most others.
    If (conspicuous

  22. There has always been money in privatisation. Big money. Commissions, consultancies, money for raising money for financing and for equity. Money for some when there is some undervaluation involved, or others when their is overvaluation involved. More money on the money go round when things go wrong, restructuring and fine tuning the regulatory set up. Just not so much in it for the taxpayer.

    With privatisation there is also great scope for corruption and instant wealth. Privatisation certainly worked wonders for the former Communist block. Privatisation may be why so many in so many of these countries now long for the ‘good old days’.

    Not surprising that those who seek private benefit would support privatisation regardless of whether there is any public benefit or not.

  23. I’ll pay Terje the compliment of being accurate in his description of Costa, but wonder how he could imagine this could be attractive to ordinary people since we move to a corporatist “command”economy such as happened in NSW, with the corporatists and their closed circle.

    Libertarianism is not corporatism. And if you think it is then you have not been paying attention. For starters the NSW ALP government was not even remotely libertarian.

    Can libertarianism be appealing to ordinary people? I have no idea but I sure as heck wish we didn’t have to contend with crooked electoral laws in our quest to find out.

  24. “There’s absolutely no doubt that the vast majority of ALP voters and a fair tranche of non-committeds would like a more communitarian ALP than we have.”

    Fran, I haven’t seen figures for this, but I’d certainly bet you’re correct. However, it seems to me that the only way the Labor party is going to redeem themselves from people that are more cynical like myself is to actually do something. Given that the only place it appears they will hang on is federally (possibly Qld), I think it’s really up to them to do something to show people they arn’t what people’s imagination thinks they are, or they might be waiting until people have forgotten the old crew which is going to be a very long time in some places (including Victoria). Perhaps Gillard needs to surprise people with something neither the Greens or anyone else can take credit for easily. Perhaps they really could do something about the education system that isn’t just a silly My Schools thing. Perhaps they really could do something about the training system, which is basically stuffed. Perhaps they really could do something realistic about the environment that Bob Brown didn’t think of first and isn’t cash-for-clunkers. Perhaps they really could do something about all sorts of important things. However, until they’ve done this, I can’t see why I would expect them to act any differently to now.

  25. Fran Barlow :
    <
    @TerjeP

    Costa is basically a libertarian that refuses to wear the label because in his words it is an American import. He is a huge fan of Hayek (had a picture of him on his office wall) and thought most government programs were a waste of taxpayers money

    I’d say his pension was a huge waste of taxpayers’ money, and I’m not even a rightwing libertarian. Then again, Costa plainly disagreed. He certainly came up with a suitable rightwing libertarian response to it.

    Costa quit the day he became eligible for a Parliamentary pension

    Plainly, the incentive to “work” (if that is the correct term for what he did) had entirely dissipated. Then again, perhaps he simply thought himself a waste of space. He was flattering himself if so, but in the right ballpark.

    Well put Fran.

  26. “Once a trot, always a trot”.
    Well, there we have it, straight from the horse’s mouth.
    I refuse to talk to trots too, by-by Terje!

  27. @rog
    Roj says
    “PJK was busy on the telly tonight whitewashing the NSW right, despite repeated questions about the NSW disease spreading to Canberra he maintained that it was all union’s fault.”

    If enough dogs get together and start barking eventually you can tell which one is the pack leader.

  28. As for PJK blaming it on the unions – he is only doing that because obviously he still follows his hopeless US imported business model of privatisation and rampant unthinking de-regulation. He is annoyed at the unions for not accepting the privatisation of electricity. He is the pack leader. PJK obviously is in the same sort of denial as the rest of his party.

    Oh go away PJK.

    How loud does the elctorate have to say it ….the majority dont like privatisations of essential infrastructure (roads, electricity, water). The unions didnt like it either. The Australian people know what they do and dont like – so why do these people get in, call themselves labor, do the opposite to what we want, and then try to convince themselves and us its working when its not?

  29. The modern Australian governments idea of investing in infrastructure?

    Designing a new website toy for us to “get the facts”.

  30. @Fran Barlow
    I’m in Lithgow (more or less) so I can confirm what you are saying. I would further add that this is the electorate that only a few years ago voted in Peter Andren federally, (the most decent parliamentarian of the Howard era) then Bob Debus (about as decent as NSW Labor gets). Lithgow is so Labor that even most of the small business people vote Labor and there have in the past even been competing Labor tickets for Council elections just to put on a show (seriously, allowed by head office). I went through the booth figures and the only booth where the National vote even got down near the 50% mark was in Kandos, the bleakest small cement town imaginable. In most of the electorate the National’s vote was up around 65% or more primary vote. The retiring Labor incumbent had become completely despised because of his local statements opposing privatisation and his record of then voting for it – he was the whip so it’s hardly surprising. Paul Toole, the Nationals candidate is an amiable but slippery young professional politician trained since birth but neither does that explain the result. People in general even seemed to like the ALP candidate, a reasonably presentable (if not well known) local who may well have won on a different day. The simple explanation is just revulsion, both of privatisation and of what the ALP has become. You don’t get a more rusted on heartland than Lithgow but on Saturday the hatred of the ALP was palpable.

  31. Oh and the blame game keeps rolling on. Today we have PJK blaming Robertson – (and frankly that NSW Labor even thinks Robertson is a potential premier is truly pathetic and shows they have no talent left and are scraping the bottom of the barrel).

    Its too late for Robbo – his name is already smeared as a developer land dealer and a Costa mate.

    Yet PJKs gripe is that Robbo opposed Iemma’s privatisation (sorry but that doesnt save Robbo either). As for PJK – we should have woken up when he started wearing Armani suits and forcing his “personal” business model down labor faithfuls throats. He doesnt get it either…MOST sane people oppose privatisation of electricity.

    These fools (yes like PJK) pushing the zombie economic policies that the prof rails against dont get that we need a better grid and we need that for better trains because they are cleaner and we need a better grid for better use of solar because its cleaner…but we wont get a better grid by handing bits to this private company and another bit to another private company and so on and expecting them to come up an integrated solution. They will just fight each other and gouge the rest of us wherever they can.

    Some things you cant carve up and privatise and electricity and the grid and how we use it is paramount to our future.

    Now we have Sartor sending a dear Eddie letter (get lost) to Obeid in todays SMH. Im sure Sartor is right. Im sure Obeid did run NSW like his own personal building company, reward his project managers and collect obscene amounts of developer donations.

    BUT we all knew that. The developers have been running over every piece of spare community and public land, stripping public schools, tafes, unis and parks and erecting massively unfriendly compacted lots of residential developments on them, blocking drains with the run off, congesting traffic with the associated cars, without thought to existing road capability (let alone constructing accommodating transport infrastructure), the environment or community use and totally ignoring local communities needs and local councils. Part 3A stinks to high heaven – so does the “state significance” process and the land and environment court.

    We all knew about the developer donations for simply years, painful years and we didnt nd dont get our vote soon enough. BUT Sartor, if he is honest, played the game and went along with Obeid and helped to collect those donations. So did Iemma. KK herself was the queen of the developer donations fundraising team before she even became planning minister, let alone the Premier.

    So Sartor isnt pure either and he shows his chief objection to Obeid was being knifed by Eddie in favour of Kristina. Frank musnt have been collecting quite enough.

    The boys can keep on talking – but they are not telling us anything we didnt already know.

  32. To be fair Alice land development takes decades of acquisition and planning and for a time NSW dropped the ball in that dept. When Bob Carr was first elected he said ‘we are not in the business of selling land’ (or words similar) which sent shivers through the industry. Without vision and planning and, most importantly, a land bank, there will be shortages which influence prices. I don’t know about other states but in NSW the only choices are to convert Crown Land title or do deals with existing developers who had anticipated the need and bought up tracts of land years creating their own land bank. The state got caught out having to deliver costly services after the urban expansion.

  33. we have a national electricity market where electricity privatisation is a no brainer.

    Gross stupidity for govts to be generating power in competiton with an abundance of private firms doing.

    Flog them off and putting the money and savings into other far more deserving and essential areas that have been neglected and are hurting our economy.

    Of great benefit to vic and sa. The other states are paying for their failure to get it through.

  34. @nick
    No brainers have caused many of the problems we now face. At a time when managed reduction of power consumption is the highest possible priority there are better arguments for nationalisation than for privatisation.

  35. nonsense.

    Look at the vic and sa case studies, their markets are working fine, consumers have lower prices and govts have benefited.

    In comparison nsw and qld are dragging the chain and imposing massive inefficiencies on everyone who resides there.

  36. nup, dollars in you hippocket for those smart enough to minimise their consumption.

    Priorities you say ?

    Surely your not suggesting higher prices from gross inefficiency in production and distribution of electricity is welfare improving and the appropriate way to achieve carbon abatement ?

    That would be way more costly than tony abbotts carbon abatement policy and that’s saying something…

  37. nick :
    dollars in you hippocket for those smart enough to minimise their consumption.

    That works no matter what the price and is my point exactly. The last thing we need right now is corporations seeking to increase profits by increasing energy consumption.

  38. Nick prices jumped hugely in SA when electricity was privatized. The government lossed revenue and investment in the Grid fell.

    Tell me about gross inefficiency!

    privatisation of the South Australian electricity industry has reduced the net worth of the public sector … the interest savings on the sale price will fall consistently short of the earnings foregone through privatisation. This is consistent with most Australian experience of privatisation (Quiggin, 2001).

    http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1039&context=artspapers&sei-redir=1#search=“electricity+privatisation+in+south+australia”

    Over-reliance on market-based economics will undermine the capacity of the government to ensure that this triple bottom line approach is realised. As noted earlier, the privatisation of the electricity industry in South Australia and its parallel participation in the National Electricity Market have raised concerns in the community about electricity pricing and system reliability. It now appears that the government has less capacity to meet social objectives like affordability and reliability, and environmental objectives such as reducing pollution and greenhouse gas emissions. (John Spoehr
    )

  39. to answer u both prices have gone up everywhere just massively more so in nsw/qld due to their inefficiencies.

    Ian you don’t seem to be aware of how the national electricity market works and how heavily regulated it is by the australian energy regulator.

    See garnutts excellent update paper 8 he released yesterday that covers in much more detail the points I’m making above,

  40. pre-industrialisation phase of worlds first continuously manufactured dye senstitised photovoltaic product on steel for building applications.
    at Shotton in North Wales.
    Dyesol (from Queanbeyan) and Tata (from India)
    functional coated steel for rooves and walls.

    i’m sure there will be the nah nah chorus but i’m excited.

    why did it take an Indian company and the Welsh Assembly to facilitate an Australian product?

    the election in NSW.
    libs stayed lib but lab? what lab?

  41. As many have observed a major cause of the demise of NSW ALP was the Iemma government’s push for privatisation against the wishes of the rank & file of ALP & the wider public. But what is not mentioned is that Iemma was driven to this because he could not fund the expenditure on services & transport & other infrastructure that the public also demanded. Maybe John Quiggin woud like to comment but I understand a major reason the government was short of funds was because the Howard/Costello government starved the states. Contary to the Howard/Costello claim that the GST would leave the states awash with funds the only independent studies I have seen reported found the states were only marginally better off than they would have been under the old Commonwealth/State financial arrangements the GST replaced. As the good citizens complained about NSW hospitals Howard reduced the Commonwealth share from 50% to 30% & diverted funds to health insurance which benefitted the well off. similarly Commonwealth funding was diverted to private schools including the very wealthy. Over the Howard/Costello reign the states’ share of the total receipts of all governments in Australia went from 42% to 38%; the proportion they last received in the 1970’s. The result was the states were unable to invest in public infastructure resulting in the huge backlog today estimated at $250 billion. Thus Iemma & other states resort to privatisation, expensive PPP deals & poker machine & other notorious taxes. All of this might not have mattered if the ALP had rejected the Howard/Costello mantra driven by right wing ideology & not economics (& which has also become accepted by much of the public) that government taxes, expenditure & debt are automatically bad & must be removed or reduced. Gillard/Swan have accepted this mantra greatly restricting what their government can do while Howard’s successor Abbott even opposes an equitable tax to ensure Australians get a fair return from their non-renewable resources. The ALP must reject the false Coalition dogma & return to the former role of Australian governments of all persuasions in directly funding & providing the much needed infrastructure the public demands.

  42. The Labor brand is now toxic. It won’t be long (~2 years) before we’ve got Coaltion governments around the country. And although I won’t make rash predictions that the ALP will never govern again (I seem to recall someone making that prediction about the Coalition after the Howard government was voted out – sorry, PQ, couldn’t resist the dig!) – it looks like the ALP is going to spend a long time in the wilderness trying to work out what it really stands for. Yes we’re two years out, but the Gillard government already looks doomed.

    People pick and choose the angles that suit their ideology. The pro-privatisation crowd reckon the lack of will to privatise was the problem, the anti-privatisation crowd reckon the opposite. I reckon it was irrelevant. The common voter couldn’t give tuppence about privatisation – mainstream Australia just wants a fiscally responsible government, socially conservative government that delivers the best possible government services in health, education, law and order and infrastructure. The NSW ALP did none of this. The Fed ALP aso appears to be struggling with peripheral issues like mining taxes and now carbon taxes. Eyes off the ball – ball dropped.

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