Power prices loom large ahead of Victorian election but the damage is already done

Wednesday 31 Oct 2018

Victorians are one month out from their next state election and the focus of both the State Government and the Opposition is firmly on energy policies.

If there’s one thing the voters are sure about, it’s that energy privatisation hasn’t worked.

In a speech earlier this year to the Committee for Economic Development of Australia, Premier Daniel Andrews summed up what most Victorians already know to be true.

"We were promised that a privatised electricity market would lower prices."

"Wrong. Privatisation has not worked, it's only made things harder for families."

This isn’t news to most Victorians. They’ve been living with the failure of electricity privatisation for 20 years.

When the Kennett Government privatised the electricity system in the 1990s as part of a program to pay down government debt, the state enjoyed an initial run of lower power prices and attractive short-term outcomes.

But after a few short years, those gains quickly gave way to reduced reserve capacity, savage cuts to infrastructure investment and maintenance budgets, and a never-ending series of prices rises.

The situation has only become worse in recent years. In 2017, Victorian household energy bills rose by 20 per cent.

At the same time, the private corporations have reaped the benefits. Last year Energy Australia tripled their profits, while AGL made more than $1 billion.

The costs for Victorians go much deeper than electricity bills. Cutting back on infrastructure and maintenance was found to be a direct cause of the 2009 Black Saturday bushfires, in which 173 people died and countless homes lost.

With all this in mind, it’s not surprising to see both the State Government and the Opposition jockeying to make power prices a key election issue. Both sides have unveiled complex policy solutions in an attempt to deliver fairer prices for consumers.

It’s hard to say just how effective either policy would be, especially with ongoing uncertainty about the Morrison Government’s national energy policy. The National Energy Guarantee (NEG) appears to be history and there’s no real clarity about what will take its place.

One thing is for certain. When it comes to the privatisation of essential services such as electricity, the community always pays. That’s why the people of WA rejected the privatisation of their electricity system so emphatically in 2017.

Unfortunately for the people of Victoria, the loss of their electricity system to private corporations is something that won’t change next month, no matter who wins.