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Energy reform « Previous | |Next »
February 24, 2003

There is a good story currently being put about the public policy world. The states are resisting the good reforms of the Howard Government's powerful third term agenda. One of these reforms is the establishment of a national electricity market. This is a good thing. All that matter is pushing on with the reform process in the face of reform fatique by the states. Its a familar story with new content.

Thus the Australian Financial Review in a recent editorial (20 Feb. 2003) said:

"...the federal government must secure an efficient national system of planning and regulation of the electricity grid to promote investment and competition. At the same time it must press the states to facilitate greater competition in energy at the production and retail levels."

The goal is investment and competition per se not lower prices for consumers or sustainability. The question to ask is why a national electricity market?

The AFR is in no doubt. It says:

"National planning and regulation for the electricity grid is a high priority because the present system has failed to generate adequate investment in interstate transmission. If Australia is to have a national and competitive market, there must be more investment in interstate electricity connections, and a change in the priorities of transmission investment within states."

It is just taken for granted that the private companies should do this not state governments. The job of the states is limited to boosting retail competition and improving efficiency by facilitating the reduction of costs. The state-owned utilities in NSW and Queensland should be broken down into smaller and more units. No mention of breaking down NRG, the US energy company that has a monopoly in South Australia, into smaller and more competitive units.

And the political fallout of the state creating a market for private companies to make a profit? Well, says the AFR, "the political dangers of these reforms are obvious". But there is no other way. The national economy requires it.

This is politics in the service of the free markets. Who said neo-liberalism was dead. The Rann Government is SA is on notice. It has to tack to the right because the winds are blowing from the right. It will be judged in terms of whether it does what the market requires:--- increasing the competitiveness of the Australian economy, not reducing social inequality or increasing ecological sustainability.

And the Rann Government will tack to the right to achieve its destination. It knows exactly where it is going. Its destination? Being re-elected in 3 years. So it will outdo the Liberals in cutting expenditure and dumping social democratic programmes to retain the confidence of the financial markets. The Labor Party under Bannon was humbled by the economic constraints imposed by the market. They have no intention of bashing their heads against the market's structural constraints. They will prove that they can outdo the Libs at their own economic game.

| Posted by Gary Sauer-Thompson at 10:14 PM | | Comments (0)