Political Moves

Broadcast: 10/08/2007

Reporter: Quentin Dempster

QUENTIN DEMPSTER: There are rumours now sweeping the state public sector that the Iemma Government is manoeuvring to privatise a number of agencies and functions.

Some informants who contacted Stateline this week were even concerned the government would do the deed while everyone was diverted by the APEC summit of world leaders in Sydney early next month.

Or the privatisations could be timed during the current federal election campaign when local unions would be too frightened to kick up a stink.

All this in a week in which the Federal Government intervened in state politics with a plan to save a troubled timber mill.

The Premier has counter-punched by threatening to withdraw from the Murray-Darling national rescue plan.

What's he on about?

We'll get to those federal manoeuvrings shortly.

First, the state privatisation hit list.

One thing we should have mentioned in Stateline's piece last week about professor Tony Owen's inquiry into the future investment needs of the electricity industry, was its implied end to state-owned power stations.

The Iemma Government's preference is for all future generation capacity to be built, owned and operated by the private sector.

The state owned coal-fired generators could disappear at the end of their operational lives.

But there's a fight back it seems. At least two state-owned corporations, Delta Electricity and Macquarie Generation, aren't going quietly.


Delta has practical experience working with the private sector to deliver bankable project financing through its sugar mills project. Its options are in advanced stages of development, including coal at Mount Piper on a brownfield site with two supercritical or ultra supercritical units of up to 1000 mw each and combined cycle gas turbine base load projects.


QUENTIN DEMPSTER: State-owned delta electricity operates power stations at Condong and Broadwater and a gas generator at Munmorah.

Delta has told Professor Owen it can finance its generation expansion plans without impacting on the state's triple A credit rating.

And state-owned Macquarie Generation, Australia's biggest generation corporation with 13 pe rcent of the national market, 40 per cent in New South Wales, operates coal fired stations at Liddell and Bayswater in the Upper Hunter.

Macquarie Generation has made it clear its wants a slice of any future action by using the latest technology in low emission coal burning.


Macquarie Generation believes it owns the best development site in New South Wales that will allow the most efficient development of a next generation coal fired power station. Preliminary studies for the Bayswater 2 project suggest that the project is technically and commercially viable, based on two 900 mw dry cooled, ultra super critical units producing more than 15,000 gwh per annum.


QUENTIN DEMPSTER: Professor Owen's Inquiry is expected to signal the start of a privatisation process. Not of the generators - that would be a breach of current Labor Party policy but the retailers Energy Australia, Country Energy, Integral Energy.

Some union bosses are opposed.

STEVE TURNER, PUBLIC SERVICE ASSOCIATION: There's a big push by the private sector to start to own the generation in NSW. Once it owns generation there'll be an argument to own the rest of it. There is already an argument to privatise retail. The sole reason for that is the private sector is saying, "we won't build generation unless we own customers, i.e. retail. So that is leading the push for that privatisation. What we are saying is that if you build Mt Piper, you've got maintaining government ownership of an essential service. It could be done a lot cheaper. It could be done in half the time frame. You would have government control of a very important industry to maintain environmental standards.

QUENTIN DEMPSTER: But it is dirty coal. Still dirty coal?

STEVE TURNER: It is not that dirty. But the reality is, because of the price of electricity, gas cannot be afforded as a base load station. What we say is, if you build Mount Piper, it could be built within five years, it would keep... It would supply our energy needs for the next ten years. That would give us a ten year window to either find a cleaner way of burning coal or alternative technologies or of a carbon tax came on, there would be room for a base load gas fired power station.

QUENTIN DEMPSTER: This is the reported shopping list so far of government owned agencies or functions which may soon be up for privatisation:

Electricity retailers (through the Owen Inquiry)

Rail maintenance (through the current Transport Department Internal Inquiry)

Sydney Ferries (currently under review through the Walker Inquiry)

WSN Waste Services, a government-funded waste separation, recycling and disposal corporation at Eastern Creek

And, although the government currently denies it, maybe New South Wales lotteries (recently proposed for privatisation by the State Opposition).

QUENTIN DEMPSTER: You're a union boss, I thought you were running the Iemma Government and this wouldn't happen under your watch?

STEVE TURNER: No no we don't run any government. We're very concerned about obviously our member and the community. We see privatisation as very bad for community standards and it is important to have government ownership of these essential services of the community, knows that its needs will continue to be met.

QUENTIN DEMPSTER: The privatisation manoeuvrings of the Iemma Government seems to have been overwhelmed by the biggest political game now raging across Australia: Howard versus Rudd.

And this week Premier Morris Iemma counterpunched with a threat to withdraw support for the Murray-Darling Basin National Water Rescue plan, claiming the Commonwealth was reneging on its original agreement.

MORRIS IEMMA: In 2014 when they start... when the water agreements expire and they start reviewing water allocations, there will be changes.

Part of his $10 billion is to provide for structural adjustment to ease the pain of the changes that are coming in seven, eight years time on how much water farmers get.

What I asked in February, "when that happens Prime Minister"... under our current National Water Initiative, the states pay liability. We share a percentage with irrigators, a percentage with the Commonwealth and residual liability rests with the states.

I asked a very simple question. "You put $10 billion on the table, that portion which is about three billion that pays a structural adjustment, if it is insufficient to pay the irrigators, will you accept the ongoing liability? You are determining the allocations, you are giving yourself the power where out of it, I don't want NSW tax payers to have an ongoing liability. If you reduce water allocations."

QUENTIN DEMPSTER: Federal Environment Minister, Malcolm Turnbull and the Prime Minister's Office are now considering NSW's complaint.