I have a piece in the Courier Mail today urging the Queensland Government to move as early as possible to privatize their electricity system.
The networks are particularly valuable and seem to be run relatively inefficiently – costs are over 50 per cent higher than in the privatised Victorian and South Australian systems. The over-staffing causing this is one reason why the power sector unions are desperate to avoid the discipline of privatisation.
One difficulty not addressed in the article is the complex arrangements in place for financing community service obligations between the different entities – a privatised Ergon network that increased its revenues might lead to higher government payments. Another complication is the disastrous retail tariff freeze which needs to be worked through.
As well as the networks the Government still owns chunks of the generation businesses, in fact more than half the output. The generation is coal fuelled and might be difficult to sell this side of an Abbott victory, and even then given all the penalties heaped on coal it may need some assurances that the government will indemnify new owners from measures that devalue the stations’ worth through carbon taxes, promoting renewable energy and so on.
All these issues are resolvable and all the time that privatisation is deferred is a cost to the taxpayer as well as a drain on the state’s productivity
Mike Nahan formerly of the IPA has just been appointed WA’s Energy Minister. With a bit of luck our power will be privatised.
Unfortunately communist Colin is opposed.
Infidel Tiger
22 Mar 13 at 11:43 am
Wuuldn’t WA be a more realistic comparartor than Victoria for cost per km of line?
If Victoria wasn’t cheaper, then there would be serious questions to be asked in Victoria.
DriftForge
22 Mar 13 at 11:53 am
If only he was able to get a great victory at the ballot box so he had some political capital he could consume to make this critical reform happen…
Token
22 Mar 13 at 11:55 am
I support privatisation in principle, but there’s too many regs with green energy at the moment… keeping it in public hands is a deterrent – as government will then (rightly) get the blame for increasing prices – instead of letting lefties pretend it’s all because of “greedy corporations”
Fleeced
22 Mar 13 at 12:05 pm
Great idea but doing this without a specific mandate is political suicide. Watch what happens to Julia “There will be no carbon tax under a government I lead” Gillard to see how the electorate deals with politicians who lie to voters.
The real test for Barnett and Newman’s leadership is whether they even attempt to make the case for privatisation. I wouldn’t hold your breath.
H B Bear
22 Mar 13 at 12:10 pm
Sigh…
…Kennett would’ve consumed the political capital and implemented the reform because it was necessary – while putting an end to the green insanity.
Colin & Can Do have a good model to copy if they are willing to show some ticker.
Token
22 Mar 13 at 12:17 pm
Yes – make it real efficient like the South Australian system!
What’s not to like about the highest electricity prices in the world? Maybe QLD can get their efficiency up even further than SA and put their price back to second place.
Chris M
22 Mar 13 at 12:38 pm
I know several people who do/have worked for either energex or power link, the two government corps repsonsible for the electricity network in qld.
In the case of energex, there is a dynastic element as son follows father into the industry. The jobs seem to be held onto for a long time, presumably because of high pay and plenty of time off.
Power link is a typical government entity where consultants can get in, gouge them for years and never actually deliver a thing. I’ve seen it happen. The only price of admission is filling out endless forms and dealing with beauracrats, a price I am never willing to pay. Saddens me, because the people I know engaged Iin this behaviour consider the,selves entrepreneurs.
brc
22 Mar 13 at 1:46 pm
I am starting to think that Alan is a fifth columnist with the express intent of coursing problems for the coalition. Newman promised he wouldn’t sell assets. End of story.
You could argue he should build a case for a policy to take to the next election, sure, but it should be expressed in those terms. Encouraging politicians to break promises? FMD.
Entropy
22 Mar 13 at 2:00 pm
Agree. The ends don’t justify the means. The means (eg. telling the truth & keeping your promises) are part of the end.
Ellen of Tasmania
22 Mar 13 at 2:13 pm
Fleeced – privatising the power generation and transmission industries is the perfect time to scrub all that Green Tape out of the system. Besides which, why is the Federal Government dictating to the States over a States matter?
Tell the Feds to piss off.
Winston Smith
22 Mar 13 at 2:18 pm
South Australian energy is expensive because of the ridiculous state government impost of a 33% renewable energy target for 2020. This is independent of the effect that privatisation has had on poles-and-wires costs, which have decreased. The average electricity bill would be even more expensive if SA were pursuing the 33% target with the entire electricity infrastructure in public ownership.
Incidentally, why are Queenslanders and West Australians so fearful of asset sales? Victorians are meant to be mad commies but selling stuff off wasn’t that much of a fuss for us.
Toxic
22 Mar 13 at 2:53 pm
Understand that private enterprise is quite likely to run things more efficiently, but not sure private ownership of monopoly infrastructure has been the gold standard.
Am reminded of this every time I visit Sydney Airport, especially anything to do with disastrous car parking, attempts to meet passengers etc.
Michael
22 Mar 13 at 2:54 pm
I will have to respectfully disagree with the nervous Nellies here, you’ll only get once chance at this, go hard and flog the lot off.
We have to completely defund the socialist rent-a-crowd, get them out busy trying to make a living like the rest of us, not sitting around drinking coffee in meetings thinking up new ways to waste our money on $250k per year salaries.
Forester
22 Mar 13 at 3:03 pm
Why are people here loyal to the Liberal Party? I just think that’s utterly pathetic. I’m loyal to freedom. If the LP’s goal don’t align with freedom, then fuck the Liberal Party. I would be happy with the complete ruin and dissolution of the Liberal Party if they could achieve major reform before it happens.
Newman should become a martyr. Privatise hard. Sack another 50,000 public servants. Halve the wages for the remaining ones and deregister every union in sight. Cut spending by 90% and taxes too. Abolish the law of defamation. Make suing for a tort so difficult that 95% of lawyers can’t make ends meat. Reinstitute the death penalty and hard labour. 3 strikes = life in prison for any indictable offense.
If he truly loved Queensland that’s what he’d do. Sure he’d get voted out, but the incoming government couldn’t come close to undoing it all.
James B
22 Mar 13 at 3:31 pm
Too many Bolt refugees have mistaken this for a spiv conservative site.
There should be a quiz before you can join up.
Infidel Tiger
22 Mar 13 at 3:34 pm
Heh. I found Bolt through Catallaxy.
Gab
22 Mar 13 at 3:39 pm
Are you ignoring my posts about Jeff Kennett for a reason?
Token
22 Mar 13 at 3:41 pm
Never happen. There were so many lies told by the last lot that Newman made keeping his word a major point of difference. Maybe build a case for a mandate as someone up thread mentioned. Otherwise, nuh.
Cato the Elder
22 Mar 13 at 3:55 pm
What has keeping promises to do with a particular political party? If you can’t keep your word you should not be in business – any business.
Of more concern are those who let ideology override honour and the keeping of their word. Those that are so focused on ends that any means is justified. Leave that sort of crap to the greens and Peter Garrett.
Entropy
22 Mar 13 at 4:29 pm
Token: No I’m not ignoring you. Just responding to the bulk of the people here.
Jeff Kennet’s a real hero of mine. What an amazing bloke.
James B
22 Mar 13 at 4:29 pm
If kennet had taken it slower ,not like a bull in a china shop ,Victoria would not have had bracks or brumby, no desal ,air pipelines to Melbourne,and no massive debt,kennet was always impulsive even as a student at Scotch Collage,he and peacock were arrogant little shits.
Borisgodunov
22 Mar 13 at 4:49 pm
Disgraceful suggestion JB. Utterly disgraceful.
If we descend into the gutter, no matter how ‘justified’ the ends, we become like them.
Just because the left are a bunch of mendacious liars as a matter of (lack of) principle doesn’t mean that people of good intentions should ape that behaviour.
mct
22 Mar 13 at 4:52 pm
I disagree Boris, I think if anything he took it too slow. The privatisation slowed/stopped in his second term. He could have privatised fire, most police functions, most government departments, hospitals, etc.
James B
22 Mar 13 at 4:53 pm
These are disgraceful suggestions????:
I’d offer my first born to anyone who achieved half this magnificent agenda.
There are far too many Liberal Party luvvies infesting this site. What a shock you’ll get come September when we turn the blowtorch to socialist Tone and his inbred band of slack jawed lickspittles.
Infidel Tiger
22 Mar 13 at 4:57 pm
Finding the balance between maintaining a reasonable level of service and getting value for taxpayers is always a hard ask. I think that most people agree that the Sydney airport sale was a stuff-up. OTOH, the sale of Telstra, the biggest company in Australia by far, was pretty well executed. (Buffs fingernails for the small role in that epic.)
For young readers, and forgetful older ones, in 1990 Telstra had close as makes no difference to 100% of the telecommunications market. People in the country still had party lines (shared lines where your neighbours could listen in on your conversations). Mobile phones were bricks for the very rich.
Fast forward, and while Telstra still dominates the market, the market is growing and Telstra’s share is shrinking. Not only that, it has continued to make a profit while dropping real prices.
Mobile services are relatively cheap and accessible. This does not seem to be a big deal. But, when I was growing up in Sydney, after more than 60 years of a government monopoly, it took at least a month to get a new phone connected in an established suburb. If you were in the country – fugedaboudit.
Part of this process has meant losing thousands of employees. One of the first complaints of opponents of privatisation is that it will cost jobs. Apparently, jobs in government-owned enterprises are sacred, even though they raise costs for consumers.
Privatisation is not an easy sell – the costs of inefficiency are thin and widely spread. But it can and should be done. But Campbell & co need to think it out very carefully first.
johanna
22 Mar 13 at 5:03 pm
Yes, IT they are.
Not of themselves – heck, agree with most if not all – but there is simpoly no way anyone should countenance saying one thing in the campaign and then doing something diametrically opposed once in government without the most serious of reasons to do so.
Those reasons do not exist in Queensland, and there is plenty for Newman to be getting on with in this term. If he wants to make the case for the second term, fine.
Australian democracy has been damaged enough by the liars of the left. We cannot adfford to see that damage entrenched by a tit for tat campaign from the right…. no matter how seductive such a prospect might be!
mct
22 Mar 13 at 5:14 pm
Typos galore!
mct
22 Mar 13 at 5:15 pm
Start building modern coal fired power stations , bunch of retardo’s. And get some base load power into ya, the whole of the East Coast is made of coal.
Plenty for everyone.
caveman
22 Mar 13 at 5:29 pm
I can’t see how the desire for honesty in politics should equate anyone with being a Liberal supporter. Give me a break.
Ellen of Tasmania
22 Mar 13 at 6:30 pm
I agree with James B. Not about the lying because that as mct says quite rightly is at the core of the political compact. I agree about not waiting for the usually watered down dumbed down version of someone last minute last decade idea.
But if the Liberals can’t do it- piss them off. We don’t owe them anything. Catallaxy points the way to other areas of public action/support- IPA , Quadrant, etc. There are other avenues for politics other than a vote ever 4 years I have decided.
Like all those piss weak new age coach tell us- i have öwned’ my promise to publicly abandon Abbot for a more fitting agenda ór in deathly tones: a far right “”probably a banned party/ the minute he caves on a truely liberal agenda.
MT Isa Miner
22 Mar 13 at 6:45 pm
Has the IPA ever seen a private monopoly it didn’t like?
sdfc
22 Mar 13 at 7:03 pm
The point isn’t whether or not the liberals or whoever do or do not have the guts to do what needs to be done. If they said they wouldn’t do it, do not ‘effing do it!
Wait until you have gone back to the people with the policy, properly explain why it needs to be done.
I fuckn hate lying arsehole politicians who say one thing and do another.
Entropy
22 Mar 13 at 7:23 pm
A few things to remember about power networks:
They are monopolies so monopoly supervision becomes an issue. They often overcharge so monitoring return on assets creates it’s own complications such as over investment.
The major cost of a power network is capital. The cost of capital for a private owner would most likely be double that faced by government. The extra expense this entails will be factored into the price charged for transmission. The option would exist for the government to provide the funding at market rates and use the difference between its own borrowing cost currently around 4% and the all in. funding cost of the private owner (say their weighted average cost of capital) of probably in excess of 10%. The argument against this is that the government is then keeping the risks it currently runs. The reality is that the government can never absolve itself from risks associated with the provision of electricity so privatisation can never remove the government’s risks.
Frank Brus
22 Mar 13 at 7:54 pm
What Entropy said: Howard said no GST at the first election and then he ran with the GST next time.
The people need to have stuff explained to them, the rhetoric is important, and the story. If the mainstream media were worth a pinch of the proverbial there could actually be some decent public discussion but they kill the conservative and economic rationalist narratives.
Poor Old Rafe
22 Mar 13 at 8:00 pm
Power supply is a natural monopoly market – these are good canditates for govt control. Would you like foreigners (how about a chinease govt company ?)owning critical infrastructure ? . Id like to know – what do libertarians and extreme free market IPA style people think a govt should do ? Anything at all (army , the court system ?)?
Some Bolt refugees are here because his site is censored . Try it for yourself – make some reasonable but contary posts and see how many get thru , About 1 in 5 i found , so i ditched it . Mr free speech !
Regarding regulation, toothless media watchdog head Julian Disneys submission to the Finklestyne inquiry is really worth a read . He talks about the unfortunate need to maximise free speech for the maximun number of people by using some minimal regulation .- a powerful argument -so far from what we see in the mainstream media .
sunshine
22 Mar 13 at 9:32 pm
Yes, but there’s no need for you all to make idiots of yourselves because we who believe in extreme freedom and free markets give you an open mic.
This isn’t a site for softcock LNP spivs who are only a rung up from the ALP filth.
Infidel Tiger
22 Mar 13 at 9:40 pm
See I don’t know up front the economics but I know that if you don’t EXPLAIN it so that my mother and the other deaf and confused old dears can understand it and the blokes in the crib room and the tennis mums your’re stuffed. Like RAFE says. Like the latte wankers say: its the narrative dudes. The bridge has to be built between sunshine and Brus and joanna and it needs a proper story.
The left wing have monopolised all the stories for too many years- just like they have cut us out of education and media. We need to wake up and start to take charge of some of those areas in real time campaigns. That is where the war is.
MT Isa Miner
22 Mar 13 at 9:44 pm
Just had a read. God (figure of speech or not as you choose) I LOVE free speech. Even the (I’ll define it for myself, thankyou Mr Conroy) bullshit. It’s all beautiful.
lem
22 Mar 13 at 10:08 pm
Governments who break promises are crap. If they say they won’t, they’re stuck with it. I don’t see how selling someone a car and delivering a camel is “the free market” even if, for some reason, the camel is really truly better.
No trust, no honesty? No market and no freedom.
That said, sell the lot ASAP; and that means, after talking it to an election.
Meantime, vote for the lesser of two evils. One thing the left has all over the right is that they never let the imperfections of the nearest-fit candidate cause them to deliver victory to the worst-fit.
wreckage
22 Mar 13 at 10:32 pm
Mt Isa –
Im all for bridges and stories . Conversation and respectful debate can never be a bad idea . From my perspective tho the left in aust is losing big time now – you are right they have a firm ,tho much diminished, foothold in education – and probably always will. But this is not so in media (especially mainstream) . The internet is a different story tho – Im afraid big money will win there in the end too .
sunshine
22 Mar 13 at 10:52 pm
‘sactly.
JC
22 Mar 13 at 10:57 pm
and yet… people still beleive anna bligh privitised the electricity market… qlders are a woerd lot, very anti privitisation yet pro liberal.
Mundi
22 Mar 13 at 11:43 pm
I strongly disagree about breaking the electoral commitment Alan – Newman ran on a platform of no asset sales without a mandate, break that trust and you are toast – see Bligh, A and Gillard, J
Take it to the election and get a mandate.
Also the “50% higher than Victoria” is an exceedingly simple and misleading metric, and ignores the massive differences in network size and geographic distribution – Queensland is twice the size of Victoria geographically with a less dense population overall – its not even close to an apples to apples comparison.
Sure there are inefficiencies, but if you truly want to justify privatisation and trashing their electoral position you better have more evidence than that.
ugh
23 Mar 13 at 4:30 am
infidel tiger thinks merly letting someone speak who he dont agree with is an example of “extreme freedom” . he or she sounds like an extremist to me .That sort of intolerence belongs in the Taliban .
Too much ‘freedom’ = country ends up run by small group of mega powerful and wealthy oligarchs .
Look at football leagues ! English soccer is unregulated and only 3 teams can win (and one is almost as big as the rest combined) . American gridiron is run with rules designed to preserve competition that would make Marx proud -result is a very even competition .
sunshine
23 Mar 13 at 8:51 am
You tend to mostly get those oligarchs in rigid systems that support the status quo and create massive barriers to entry.
wreckage
23 Mar 13 at 10:02 am
Ugh
Actually on the usual measure (revenue per connection per year) Qld is 70% higher cost than Vic. If you took just Melbourne and Brisbane you would find the 50% higher would hold. Doubtless there are many complications and that’s what the formerly govt owned poles and wires monopolies used to say when they were comp[ared with the US system. But, lo and behold, on privatisation massive economies were made
alan Moran
23 Mar 13 at 10:25 am
Says it all for me, really. Breaking promises is just dumb.
Septimus
23 Mar 13 at 10:28 am
Homer? Is that you!?
.
24 Mar 13 at 6:30 pm