The Australian’s Nick Cater, in his superb denouement of the ACT’s Human Rights Commission makes us yearn for otiose bureaucracy – the do-nothing agencies rather than the negative value-added institutions that prey on legitimate businesses, leaving the costs they, as the Vanguard of the Proletariat, impose on suppliers to be borne by the consumer they purport to represent.
Today we have the annual report of the Energy and Water Ombudsman of Victoria (EWOV). This variety of ombudsman is not to be confused with the State Ombudsman which, ostensibly, has the peerlessly pure task of offering an avenue of redress to the tyrannies endemic in public service monopolies quarantined from real accountability.
Aside from water (a small part of its business) EWOV is largely responsible for monitoring, stoking and arbitrating complaints about the electricity and gas industries. And it names names – this year two of the big three energy companies (Origin and TRU) were singled out as receiving increased complaints while AGL, having shown a fall, is unhelpfully strangling the regulator’s funding base!
That’s because the EWOW funding is overwhelmingly based on the complaints they receive. Its revenues largely comprise daily fees payable in the first instance by businesses and the fees increase to the degree that a complaint can be leveraged into higher areas of oversight and review.
Although the EWOW Annual Report was publicly released today, like all slick politicians, EWOW management provided an advanced pre-release to reliable journalists complete with self-serving aphorisms from the Ombudsman herself. It notes that EWOW received 64,000 complaints during the year and dredged $16 million from its captive customers, mainly the electricity retailers. And no job is too small, as evidenced by its call, “Even one complaint lodged with us can be a sign of a systemic problem”. (Actually, a great many of the complaints are about price increases and feed-in tariff rates and other matters that are due to government actions).
Such entrepreneurship has allowed EWOW to grow its staff to 120, up from just one 15 years ago. In the period when electricity was a state-owned monopoly there was no deemed need even though competition would have made it less and not more necessary.
The EWOW empire builder, Fiona McLeod, has moved on to a new government-funded gig which is to establish a National Energy Consumer Advocacy Centre. With an initial establishment of 9.5 people, on her past record she should have every hope of creating a vast overbearing bureaucracy of over 1000 people 15 years from now. Her successor, Cynthia Gebert, sports an engaging Cheryl Kernot tilt in her photographs to demonstrate her empathy with the Little People who big businesses are oppressing.
The EWOW Annual Report contains all the expected boiler-plate portentous Statements about “Visions”, “Mission” and “Guiding Principles”. The Guiding Principles tell us about EWOW’s Independence, (impartial, complaint resolution not advocacy), Access, Equity, Quality, Effectiveness, Efficiency, Community Awareness, and Linkages.
Notwithstanding its strictures about being impartial and about settling disputes fairly, EWOW feels no constraints about wandering into policy matters and informing bodies from the Senate down to other regulatory agencies about how the energy industry should best operate. Thus, a recent submission to the Senate sought,
- a flat rate ‘social’ tariff for eligible concession card holders that is less than a retailer’s cheapest market offer.
- A mandatory requirement that retailers recommend the most appropriate tariff to a customer in financial hardship and monitor the customer’s payments, usage behaviour and circumstances.
- An increase in government concessions, grants and/or rebates in response to higher electricity costs.
- Government support to allow concession card holders to buy and install an in-house display free of charge to use in conjunction with the Advanced Meter (Smart Meter). This will help inform customers in ‘real time’ about how and when they use electricity and shift electricity use to cheaper times of the day.
More cost impositions. But for a competitive market, the surest way of getting “fairness” in the provision of goods and services is to have multiple suppliers and we have these in spades throughout the electricity industry, constrained only (though not in Victoria) by State governments fixing prices for household customers.
The recent plethora of energy reports comment about the decline in the electricity supply industry’s productivity. The reasons are clear – costs have risen. With electricity this is partly because of the industry being forced to substitute low productivity wind and solar energy sources for high productivity coal generation; partly it is due to regulations on green energy, on how to respond to customers, on reports to regulators have all involved firms hiring more people than are justified by meeting genuine customer needs. EWOW is a part of this cost imposition.
Many economists have remarked upon the increasing importance of bureaucracy in decelerating the growth of income levels by placing impediments in the way of lowering costs and otherwise meeting consumer needs.
In this vein, William Kingston writes,
All intervention, in fact, widens the area of poor decision-making, by increasing the importance of bureaucratic rather than innovatory firms in an economy, and by strengthening the bureaucratic element at the expense of innovators in all managements, including those in the private sector.
We badly need a house clean to eradicate the regulatory agencies that are doing much to advance the careers of a business-hostile intelligentsia, which sucking productivity out of the economy.