O’Farrell’s power deal

WHEN the recent federal budget made it apparent just how big the shortfall of GST income to NSW was going to be, Premier Barry O’Farrell came under immediate pressure to raise more funds.

A premier clearly more comfortable with gentle reform than with bold initiatives, Mr O’Farrell had repeatedly rebuffed attempts by Liberal hardliners to embrace the standard agenda of big job cuts and asset sales.

In particular, the Premier had previously insisted that the ‘‘poles and wires’’ of the state’s electricity distribution network would remain in public hands.

Until now.

It appears that the Premier’s former apparent reluctance to sell the distribution network may have been based on politics more than principle.

Now he has been able to secure the support of the Shooters and Fishers Party – which holds the balance of power in the state’s upper house – he has lost no time in announcing the selloff.

He will, of course, face a backlash, from at least two directions.

The first and smallest protest will come from those who disapprove of the idea of hunting in national parks. Mr O’Farrell has found, as Labor found before him, that getting the Shooters and Fishers onside comes at a cost. In this case the cost is giving in to that single issue party’s goal of access to national parks for rifles, bows and hunting dogs.

That won’t wash well with some voters, and carries the small but potent risk of terrible electoral repercussions if anybody is injured, or endangered wildlife destroyed, as a result of the deal.

The bigger and more serious backlash will come from ordinary citizens of NSW who are already reeling from skyrocketing power bills.

A few days ago the NSW energy and water ombudsman, Clare Petre, called for debate on the impact of electricity prices, following a sharp rise in complaints.

And last month the Independent Pricing and Remuneration Tribunal (IPART) proposed yet another hike – this time about 16 per cent – based on the federal government’s carbon tax and on costly upgrades to poles and wires.

NSW people are unlikely to accept any assurances that this privatisation won’t drive prices still higher. Private owners must take their profits, after all.

Overseas experience suggests private owners of electricity supply networks may be more tolerant of system shortcomings than public authorities tend to be, so it’s likely many people will expect not only higher prices, but also – in time – reduced reliability.

Mr O’Farrell has promised that the sale will liberate about $3billion to spend on infrastructure.

That might be good news for those Sydney rail projects, so dear to the government’s heart, but so apparently endangered by the recently announced shortfall in GST income from the federal budget.

Whether the Hunter Region – one of the key engine rooms of state growth – stands to benefit remains to be seen.

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