THE style of the O'Farrell premiership is becoming clear: it is the middle way, the course charted between extremes. That is the conclusion one can draw from the Premier's decision to accept the advice of the Tamberlin inquiry which investigated Labor's part sale of power assets. The government will sell the power stations, generator sites and the Cobbora coalmine. The estimated sale price is $5 billion in total - a far cry from the $25 billion which might have been on offer when privatisation was mooted under Bob Carr in 1997, or even the sums suggested when Labor had a second go, under Morris Iemma in 2008.
THE style of the O'Farrell premiership is becoming clear: it is the middle way, the course charted between extremes. That is the conclusion one can draw from the Premier's decision to accept the advice of the Tamberlin inquiry which investigated Labor's part sale of power assets. The government will sell the power stations, generator sites and the Cobbora coalmine. The estimated sale price is $5 billion in total - a far cry from the $25 billion which might have been on offer when privatisation was mooted under Bob Carr in 1997, or even the sums suggested when Labor had a second go, under Morris Iemma in 2008.
It is disappointingly little to expect from the sale of assets built up over generations, and which play a key role in the economy of the state. But although it is not much of a deal, there is some justice in this: much of the disappointment is of O'Farrell's making.
The head of Infrastructure NSW, Nick Greiner, has made no secret of his view that the whole industry - not only the generators but also the distribution network - should be sold. NSW, he has said, needs to get serious if it is to reduce the backlog of capital works which is dogging the state's development. Many in the business community agree with him.
The Premier, however, is far less enthusiastic and has taken care to dampen down Greiner's enthusiasm. "He's one of 4.5 million voters across this state who's entitled to his view," he said on Thursday. That is not quite true. Greiner is considerably more than just another voter. He is the head of the body set up by O'Farrell to advise it on priorities and, in advocating the full sale, he is doing just that. The extra $30 billion it is estimated the state would receive from selling the distribution network would enable NSW to make a useful start on the capital works it needs.
Holding O'Farrell back from acceding to Greiner's view is his promise before the election to keep the poles and wires in public hands. There is a respectable argument for this position: the network is a natural monopoly. The state needs only one, not many competing networks. The danger might be, therefore, that an owner would take advantage of its monopoly position and start overcharging. That would be possible - if the state government was too weak to regulate effectively. There is no sign, though, that that is the case.
O'Farrell's promise, though, was based not so much on the economic case but the political one. He was under pressure from National Party members who feared a privatised network might increase the efficiency of its workforce and cut jobs in regional areas. Politics has always guided the Premier on this issue. It was politics, not economics or the good of the state, which led him to oppose Iemma's and Michael Costa's plan - because he stood to gain when it failed in the upper house for want of Coalition support. So it proved: Iemma and Costa quickly left office, two early scalps of the man who is now premier. The fact that privatisation was a long-standing Coalition policy was irrelevant.
It is politics that now keeps O'Farrell to the middle of the road. He is aware that the legacy of Labor's bruising fight is an abiding distrust of privatisation in the public mind, sown there by a vigorous publicity campaign the unions undertook to frustrate Iemma and Costa. He is reluctant too - and quite rightly - to break a promise. Regrettably, that stance would be far more honourable if the promise in question were not so poorly though out and short-sighted.
On this issue, Labor under John Robertson is now simply irrelevant. Its scant numbers in Parliament, the result of its comprehensive rejection by voters on this issue among others, put it in no position to affect the outcome; its chaotic record in office on the question of selling power assets gives it no standing to advocate policy now; and the dire role played by its present leader, Robertson, in undermining Iemma's plan serves only to emphasise its haplessness and confusion.
What this saga shows is the difficulty governments in NSW can encounter when they try to construct and deliver an economically rational policy which cuts across entrenched interests. It is the same gridlock that has beset planning policy, the same that has frustrated attempts to build a second airport.
As we have said, there is a certain justice in the poor return O'Farrell and his government will receive from this sale, but there is a lesson, too: the middle way may not get anyone where they want to go.
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More pizazz and oomph would be achieved by simply embracing Wookiees' natural sexuality. Wookiees, displayed tastefully nude, will have a genuine appeal to some burlesque fans, we feel sure. Then there is media management. Teasing suggestions could be floated on evening news bulletins of Wookiee-waxing, with some hapless cast members getting full Brazilians by mistake. If that fails to sell tickets, there's always the "banned in Brisbane" strategy. Surely one of those who tell the census collectors their religion is "Jedi knight" would be willing to fulminate from a pulpit about the sexual exploitation of vulnerable teenage Wookiees. That would bring the crowds in.
Frequently Asked Questions about this Article…
What NSW power assets did the O'Farrell government decide to sell and what is the estimated sale value?
The O'Farrell government accepted the Tamberlin inquiry advice to sell the state's power stations, generator sites and the Cobbora coalmine. The estimated sale price for those assets is about $5 billion in total, considerably less than figures discussed in past privatisation debates.
Why did the government keep the distribution network (poles and wires) in public hands instead of selling it?
Premier O'Farrell kept his pre-election promise to leave the poles and wires public. Politics played a big role: pressure from National Party members worried about regional job losses and strong public scepticism seeded by union campaigns made the Premier reluctant to push a full sale despite Infrastructure NSW head Nick Greiner advocating it.
How much could selling the NSW distribution network raise and how would that money be used?
The article notes estimates that selling the distribution network could raise about an extra $30 billion. Infrastructure NSW argued that such proceeds would allow the state to make a meaningful start on the backlog of capital works the state needs to fund.
What are the investment implications of selling generators but keeping the network public?
For everyday investors, this ‘middle-way’ approach means the state will raise only modest proceeds (around $5 billion) so the immediate fiscal benefit is limited. Keeping the network public preserves a natural-monopoly asset under government control, which reduces some privatisation-related regulatory and pricing risks but also limits opportunities for large one-off state asset-sale returns.
Could privatisation of the distribution network lead to higher power prices or poor outcomes for consumers?
The article points out a theoretical risk: a privately owned network could exploit its natural-monopoly position and overcharge customers if government regulation were weak. However, it also says there is no sign that the state government would be too weak to regulate effectively, so that risk is not presented as an imminent certainty.
How does political risk affect infrastructure privatisation in NSW and what should investors watch?
Political risk is central—pre-election promises, union campaigns and party politics shaped the outcome. Everyday investors should watch government commitments, public sentiment on privatisation, the stance of advisory bodies like Infrastructure NSW, and any union or party campaigns that could block or alter asset-sales plans.
Why do some business leaders and Infrastructure NSW support selling more of the state's power assets?
Figures like Nick Greiner argue that selling the whole industry, including the distribution network, would unlock significant funds (an estimated $30 billion extra) to address the state’s capital works backlog and speed development. Many in the business community agree selling would provide resources to invest in infrastructure.
What does the article mean by saying the 'middle way' may not get anyone where they want to go?
The article criticises the compromise approach—selling only some assets while keeping others public—because it delivers a relatively small financial return ($5 billion) and may fail to achieve the larger policy goals (like fully funding capital works) that a more decisive privatisation could. For investors, that suggests limited upside from the sale and ongoing political and policy uncertainty.
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