Privatisation Articles:

THE poles and wires of electricity networks are natural monopolies, accounting for 60 to 70 per cent of household consumers’ costs. Their ownership remains highly politicised 20 years after the Kennett government in Victoria opened the book on Australian privatisations. At the time, claims were made that private owners would milk the consumer and cut corners by avoiding necessary reinvestment and maintenance ....

Thirty years ago, at the dawn of the Australian reform era, there was a lively debate about the merits of public versus private ownership. At that stage, conscious of its support from featherbedded unions, Labor argued it was competition, not ownership, that drove efficiency.

Privatisation has never been popular electorally. There is a range of reasons for this. Many people believe a business that is under political control can be forced to provide services below cost, some feel a sense of satisfaction in shared ownership, and others consider private ownership may unduly cut costs. 

Energy issues are rivalling political scandals as a preoccupation of the news cycle in both America and Australia. In the US, reduced costs of extracting gas and oil from shale are delivering cheap domestic oil and gas - with implications for renewable energy policy, global gas prices and the US Navy in the Persian Gulf.

In an attempt to deflect blame for electricity price increases from the carbon tax, Julia Gillard has drawn attention to the high cost of state-owned enterprises' poles and wires businesses and associated profiteering. NSW households have seen their electricity prices rise by 18 per cent both this year and last. 

SENSIBLY, the Australian Industry Group has recommended the Queensland Government privatise its $2 billion electricity transmission business, Powerlink. The proposal should also extend to the state's electricity distribution businesses, Energex and Ergon. Like Powerlink, these are regulated monopolies and may be worth $20 billion to private bidders.

The parliamentary impasse between New South Wales Premier Kristina Keneally and the opposition over whether the electricity industry sale should be examined reignites an issue the Premier believed she had buried.

State governments cannot seem to rein in spending so it matches their revenues. The upshot is skyrocketing debt levels. The NSW and Queensland governments see selling assets through privatisation as a solution. Privatisation of government-owned businesses improves efficiency. 

The NSW government's 10-year march to electricity privatisation is finally under way. The state's retailers and generators are earmarked for sale. But half of the costs of electricity comprise network costs - poles and wires. Regulatory decisions determine charges for these ''natural monopolies''. With network pricing, regulators walk a tightrope

A dozen years ago, virtually all electricity in Australia was generated in government-owned plants, transmitted along government-owned facilities and marketed by government-owned retailers. The electricity industry comprised seven Statebased utilities, which had total control over generation and sales within their respective States.

A dozen years ago, virtually all electricity in Australia was generated in government-owned plants, transmitted along government-owned facilities and marketed by government-owned retailers. The electricity industry comprised seven Statebased utilities, which had total control over generation and sales within their respective States.

The Queensland Government has foreshadowed major changes in its electricity businesses. Its two retail distributors, Energex and Ergon, though active as retailers in the southern states, face little home state competition. The Government is now committed to opening the retail market fully to interstate firms. 

Aside from his role as NSW Finance Minister, one of Michael Costa's new jobs is, alongside new Premier Morris Iemma, as the shareholder minister to the state's eight corporatised electricity businesses. This role is one fraught with peril. As one former shareholder minister, South Australian Minister Rob Lucas related, being shareholder representative of several competing businesses presents severe conflicts of interest. 

Following Victoria's electricity restructuring and privatisation there were massive generator performance improvements. Gradual increases in demand have whittled away the consequent excess supply, bringing increased wholesale prices over the past year. But last month NEMMCO, the Australian electricity market manager, issued a report that deflated fears

Public Private Partnerships (PPPs) worldwide are redefining the frontiers between public and private provision of infrastructure. Victoria has seen their profile raised with the planned partnership for the Scoresby Freeway. 

“Until self-trained economist Edwin Chadwick came along, 19th-century Britain had a huge problem with its convicts bound for Australia: most were dying before they reached the "fatal shore" down under. Chadwick, however, proposed a solution as effective has it was simple. Instead of paying sea captains by the number of convicts that boarded their ships

The New South Wales voters may have delivered an unambiguous thumbs down to electricity privatisation but the issues that persuaded the Premier and his Treasurer to favour it remain. The same imperatives that brought the ALP Government to privatise the Commonwealth Bank and Qantas are present in energy markets. 

Telstra claims its cost of rural telecommunication subsidies is $1.8 billion per year. That figure creates a real second term headache for the Minister, Mr Alston, who wants to cap the costs at $253 million. This spat on the Telstra Universal Service Obligations highlights the regulatory requirements on the industry.

In spite of election commitments, the South Australian Government has bitten the bullet and taken the road to electricity privatisation. Premier Olson is pointing to the cash benefits of privatisation and suggesting continued government ownership would put $1 billion of Commonwealth Government Competition Policy payment funding in jeopardy.