Numbed by numbers in an electric haze

A campaign to incite fear about the prospect of privatising state electricity network businesses is surviving off the misrepresentation of distribution sale proceeds.

Even very junior journalists must know that in this day and age you can’t trust anyone’s statistics.

In particular, you would think that, on being presented with an especially eye-popping one, the journalistic instinct would be to query it and, if possible, to check it independently.

Thus, last December, one would have expected the denizens of the Canberra Press Gallery to go to the Productivity Commission’s electricity networks report and check Julia Gillard’s promise of a $250 a year power bill cut for families by 2014.

(What the commission actually says – and in the first two pages of the report, too, so it is hard to miss – is that cuts of between $100 and $250 annually could be achieved if smart meters are rolled out across the east coast and time-of-use charges are introduced. And this saving will be after we have paid for the meters.)

Now comes the trade unions in New South Wales with a scare campaign against privatising the state’s electricity network businesses that asserts one effect of the sale will be to deprive the community of $3.5 billion in government revenue.

'Huh', I said on reading this, where the hell do they get that number?

The trail seems to lead from a joint media statement issued by the Electrical Trades Union, the United Services Union, the Public Services Association and the wonderfully titled Association of Professional Engineers and Scientists and Managers Australia to an Australian Associated Press report, which was then picked up by various outlets.

According to the news reports, the quartet claims that “foreign ownership” will “drive up electricity costs” and “transfer $3.5 billion the government earns from poles and wires, money used to improve schools and hospitals, into the hands of overseas investors”.

Call me old fashioned but the $3.5 billion claim yells out for further investigation, and it isn’t hard to do this.

For a start, there is the state auditor-general’s annual report to parliament on the electricity industry which tracks payments from the three distribution business and the high voltage transmission network to the government from 2008 to 2012.

Last financial year this totalled $1.133 billion compared with $854 million the previous year and $896 million in 2009-10.

And, yes, there is a mention of $3.5 billion. This is a 'special dividend' specifically relating to the sale of the distributors’ retail arms to AGL Energy, Origin Energy and Energy Australia (then TRUenergy) by the Keneally government.

Now you can be the judge of whether use of this number is mendacious or mistaken, but surely it deserved a query by the 'churnalist' recycling the unions’ statement and by the media outlets publishing this 'news'.

The unions are spending $1.5 million of their members’ money carrying this message to the state community, aided and abetted by opposition leader John Robertson (whose opinion poll ratings are worse than Julia Gillard’s) who continues to run the line that “selling off the poles and wires will send energy bills soaring for families already struggling with the rising cost of living”.

No journalist seems to think it necessary to ask Robertson exactly how this will happen given the collective east coast government move to change the independent network regulation rules to curb charges over the rest of this decade.

Nor, of course, would any delve a little to check the unions’ assertion that the charges of privatised networks are so much higher than those in government hands.

The latest Australian Energy Market Commission survey of power price trends reports, in fact, that households in NSW are being charged 11.8 cents per kilowatt hour for distributions services and 3.6 cents for transmission services versus 9.5 cents and 1.3 cents respectively in Victoria.

As it happens, a study by Ernst and Young in 2011 showed that network costs in Victoria decreased (on a per customer basis and in inflation-adjusted terms) by 9 per cent between 1996, after privatisation, while over the same period these costs rose 65 per cent in NSW and 105 per cent in Queensland for government-owned networks.

The fact that the private sector operates power networks these days in Denmark, Germany, Japan, Sweden, Britain and America without any claims of outlandish profiteering never gets a mention.

Last year’s Senate inquiry into power prices, set up by Gillard to put a floor under her initial claim in August about electricity costs and the evils of Coalition-run networks (whose capex and opex plans causing the higher charges were sanctioned by Labor state governments), saw Unions NSW collectively produce the laughable argument that if the monopoly networks fall into private hands the next step is that they force deregulation and are then “free to charge substantial amounts and hold the electricity consumers to ransom”.

But private sector networks and public sector networks are all subject to regulation by the Australian Energy Regulator and no suggestion that regulation of this sector should be abandoned has ever been made, here or overseas.

Deregulation of retail pricing is a whole different kettle of fish.

Even more laughably, the unions told senators that it was deregulated monopolies to blame for the great Californian energy crisis “when Enron got hold of the electricity network".  If prizes were available for pig ignorance, this would have to be a frontrunner.

Now the Animal Farm arguments from some free marketeers that public sector utilities – two legs – are all bad and private sector ones – four legs – can do no wrong is hardly less funny, but a respectable case can be made for governments focusing on 'inescapably public' services; police, defence and so forth. (Peter Costello’s committee of audit is pushing this to the Newman government in Queensland at present.)

The problem for mainstream politicians of all stripes is that the community is unconvinced, to put it mildly, about privatisation as a way to go.

The Essential Report found in a poll earlier this year that – in answer to the question, “generally, do you think that privatisation, that is having public services owned or run by private companies, is a good or bad idea?” – 58 per cent of respondents were in the 'bad' camp versus 22 per cent for 'good', and a relatively high 20 per cent were 'don’t knows'.

The same poll found that 62 per cent of respondents thought electricity services were better run by government versus 25 per cent favouring the private sector and 13 per cent in the 'don’t know' camp.

Both Barry O’Farrell (who is flogging the generation assets left unsold by Kristina Keneally) and Campbell Newman have made it clear that they won’t try to sell networks (or anything electric in Newman’s case) without a mandate from the next state elections due in 2015 when they could, if they wished, dangle something like $60 billion in income from just network sales before voters.

Why, then, the unions campaign now? Could it have anything to do with trying to aid the terminally ill Gillard regime?

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.

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