THE DISTILLERY: Power plays

The inability of the former NSW Labor government to deal with the state's electricity assets was a central policy failure that headlined its spectacular decline. Having deposed of that administration handsomely last year, NSW Premier Barry O'Farrell has an ambitious and potentially doomed plan to merge three electricity distributors before selling them off and, as The Australian's John Durie explains, there are a number of reasons to be sceptical. Meanwhile, The Australian Financial Review's Chanticleer columnist Michael Smith says the corporate regulator will have to do more than talk about disclosure, while a brief look overseas shows Australia's maligned mining tax is looking better and better, comparatively speaking.

But first, The Australian's John Durie explains why Australia is paying a price for the inability of NSW to get its electricity assets in order and the latest plan by the premier to merge three electricity distributors ahead of a sale is probably a bad idea.

"The first problem with O'Farrell's policy is that government's record in maximising cost savings on any asset they own is poor. He may disprove the theory, but it would be a first. The problem for the rest of the country is that inefficient distribution in one state slows everyone else down and raises costs. While the distributors in Victoria don't compete for the same customers, the regulator likes to benchmark to compare one with the other with the aim of increasing efficiency."

The Australian Financial Review's Chanticleer columnist Michael Smith says the corporate regulator's threat to keep Australian companies disclosing pertinent information to the market in a timely matter is welcome, but the policing of it is a different matter.

"The Australian Securities and Investments Commission's ability to truly deter companies from breaching disclosure obligations is hamstrung by a costly legal system, the existing regulatory framework, and its own budget. ASIC chairman Greg Medcraft wants to be seen to be cracking down on disclosure breaches, particularly in high-profile cases such as Leighton Holdings. He also wants to avoid expensive and drawn-out legal disputes, particularly when ASIC does not win, as in the case of One.Tel and James Hardie. However, this is at the heart of the defects with the existing policing system, which encourages companies effectively to buy themselves a pardon from ASIC and settle out of court whether they are guilty or not."

The Sydney Morning Herald's Ian Verrender seeks to enlighten his readers to the reality that Australia isn't the only country that taxes mining. Here's just three of them:

"Indonesia: By 2014 miners must process minerals such as iron, nickel and coal into value-added products before export. Last month the government announced possible export bans to avoid a minerals rush before the new laws come into place. Foreign companies will be forced to gradually reduce stakes in local entities after five years of production. In the sixth to 10th year, foreign ownership in any resource project is limited to 49 per cent. South Africa: The world's biggest mineral producer is debating a 50 per cent windfall tax on ‘super profits' and a 50 per cent capital gains tax on the sale of mining tenements. Ghana: Africa's second-biggest gold producer plans to raise mining taxes from 25 to 35 per cent, with a windfall tax on ‘super profits'. Existing 5 per cent royalties on output remain in place.”

Meanwhile, The Sydney Morning Herald's Michael Pascoe says group buying websites are showing potential signs that they've peaked. The Age's Adele Ferguson says all signs are good for Coca-Cola Amatil to purchase the Fijian brewery, spirits and soft drinks businesses from SABMiller. Fairfax's Insider columnist Ian McIlwraith looks at the credit card questions at David Jones, while The Australian's Tim Boreham looks at Austock, Dart Mining and Minemakers in his Criterion column.

The Age's Peter Martin says Reserve Bank governor Glenn Stevens has expressed his confusion about the gulf between what the world thinks of the Australian economy (it's bonza) and what the locals think (it so ain't). The same newspaper's Tim Colebatch also takes the Australian economy's temperature.

And finally, The Australian's Peter van Onselen looks at how outdated attitudes towards free trade manifest in modern politics.