Will the Liberals really keep Western Australia’s poles and wires in public hands?

Thursday 16 Apr 2015

Over the last week, the privatisation of the poles and wires that deliver electricity to Western Australian businesses and households has been suggested as a solution to the Barnett Government’s budget problems.

Federal Ministers Joe Hockey and Matthias Corman led the charge, supported in chorus by treasurers from other states, with the Chamber of Commerce and Industry chipping in with their predictable support.

In his public comments, Mr Barnett has said his government has no intention of selling the poles and wires that deliver our electricity.

While we welcome Mr Barnett’s statements, there is no doubt that privatisation has commenced within the electricity sector, and we are concerned this would extend to the poles and wires operated by Western Power, if the Liberals are returned for a third term in 2017.

If past behaviour is the best predictor of future behaviour, then we have a lot to be concerned about.

First, Mr Barnett has some disturbing form on election promises. While he may believe that the phrase ,“fully funded, fully costed”, was merely a slogan, rather than a promise, others look at his election commitments on public transport, forced local government amalgamations and keeping electricity price increases to inflation levels with much cynicism.

As an experienced politician, it is possible that Mr Barnett understands the concerns the community would have about the privatisation of our poles and wires and is saying what he needs to say in order to win a third time.

Second, Mr Barnett has demonstrated a strong belief in privatisation during his time in public life. As Energy Minister in the Court Government, Mr Barnett privatised AlintaGas and the Dampier to Bunbury National Gas Pipeline. It is well known that he was preparing Western Power for sale when the Liberals lost office in 2001.

Since being elected as Premier, Mr Barnett has privatised services at new hospitals, such as Fiona Stanley Hospital and the Midland Health Campus. He has privatised the new young offenders’ prison, and allowed Serco to continue with its shambolic prisoner transport contract. He has also announced the sale of port infrastructure in Fremantle and the Pilbara.

Third, Mr Barnett has appointed two of Western Australia’s leading privatisation advocates to run the energy portfolio in his government. Energy Minister Mike Nahan was a vocal supporter of privatisation on the backbench, and in his previous role as head of right wing think-tank, the Institute of Public Affairs. Mr Barnett also appointed former Chamber of Commerce and Industry boss Lyndon Rowe as Chairman of Synergy.

Under the stewardship of Mr Nahan and Mr Rowe, private companies will be permitted to retail electricity to households, which is likely to see Synergy lose market share, some public sector power stations close, and hundreds of quality public sector energy jobs lost or transferred overseas.

Under their watch, the regulation of the poles and wires that deliver our electricity will be transferred from the locally based Independent Market Operator to an eastern states regulator experienced in managing privatised systems.

Plus, despite Mr Barnett’s election commitment to keep electricity price rises to at or around the level of inflation, Mr Nahan and Mr Rowe have since put them up at more than twice the level of inflation, potentially making our electricity assets more attractive for sale.

The truth is, Mr Barnett will not be around forever. Whether he goes this side of the election or the other, Mr Nahan and Mr Rowe will survive. If we put aside Mr Barnett’s relaxed approach to election commitments, as well as his career-long commitments to privatisation, and accept his comments opposing the sale of poles and wires in good faith, his opposition will mean nothing in retirement. He won’t be able to stop privatisation zealots like Mr Nahan and Mr Rowe from his farm in Toodyay.

Our concerns are compounded by the fact that the Liberals have failed to put a credible financial plan on the table. By the time the 2017 state election comes around, the Barnett Government will have run up more than $30 billion in debt. With an annual state budget of about the same amount, Mr Barnett will have effectively spent nine state budgets for the eight years he will have been in power. Putting aside arguments about the GST, which you can read a good discussion on here, Mr Barnett is offering no plan to stop debt continuing to rise, or indeed pay off existing debt. 

We absolutely reject the idea that Mr Barnett should sell off publicly owned electricity assets to affect a one-off fix to his budget problems. While we welcome Mr Barnett’s public opposition to the sale of poles and wires, the absence of a credible financial plan leads us to suspect that the privatisation of these assets is being planned behind the scenes, for implementation at a more palatable political time.

Privatisation will mean higher electricity prices, poorer quality services and increased bushfire danger, so private companies can make a profit. It will also mean fewer jobs and apprenticeships, at a time when workers need every opportunity they can get.

While we welcome Mr Barnett’s public comments, we have some serious, legitimate concerns about whether they will actually result in the Liberals not privatising Western Australia’s publicly owned electricity system.