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Issue #1541      28 March 2012

Massive job cuts, state asset sell-offs in NSW

The NSW government is moving to sell-off state assets and cut staffing levels by downsizing or merging government agencies. The government mentioned little about such measures during the last election campaign, which brought it to power. However, since then it has announced its intention to sell or issue a long-term lease on three of the state’s biggest assets: Port Botany, (the second-biggest stevedoring port in Australia), the Sydney desalination plant and the state-owned electricity generators.

And now it’s considering job cuts and asset disposals everywhere else. A recently-released draft government report into the state public sector recommends privatising public services, by transferring their functions to the private sector, and/or by the lease or sale of public assets.

When asked to nominate specific areas most likely to be affected by the report’s proposals, its author Terry Schott replied enthusiastically that they were “everywhere”, and that “Immediate steps should be taken to group or merge entities where appropriate and abolish them if they no longer serve a purpose”.

Nick Greiner, former Liberal state premier and now NSW government consultant, claims that state borrowings or operating surpluses from government-owned assets can no longer be used to fund future public sector development, because NSW’s development has been slower than that of other states. At the same time, just like its ALP predecessors, the O’Farrell government is intent on selling off government agencies that actually make money, such as the electricity authorities.

Greiner has blamed government “greed” for the failure of a number of public/private partnerships, including Sydney’s Lane Cove and Cross City tunnels, and the Brisbane RiverCity Motorway.

In a recent interview he airily dismissed the obvious idea of approaching the federal government for special funding, declaring that the only options are asset recycling and private funding.

Selling off the power

The O’Farrell government intends to merge the three government corporations that currently run the NSW electricity distribution network (the “poles and wires”), and to sell the merged organisation during the government’s next term, if re-elected. It claims the merger will increase efficiency, and anticipates sacking 529 workers out of its current workforce of 1,300.

However, the long term intention is almost certainly to increase its attractiveness for a future sale. The corporation’s new form would enable it to be sold as a huge single entity, with near-total dominance of the market, or as three separate units if that’s what potential buyers want.

Some of the anticipated $400 million savings would be distributed to low-income consumers as a vote catcher, and also as a sweetener for the sharp rises in electricity rates that would surely follow privatisation.

The savings would certainly not be used to develop renewable energy power such as wind farms, for which O’Farrell has a deep and publicly-declared hatred, or domestic solar power rebates which have been savagely reduced by the government.

The electricity marketing authorities have already been privatised. The sale or long-term lease of the generators and distribution network would hand this crucial state industry in its entirety to private corporations.

Railroading the taxpayer

The O’Farrell regime has foreshadowed franchising the Eastern Suburbs and Illawarra railway lines. Moreover, it wants to remove staff from railways stations that are used by fewer than 2,000 passengers per weekday, potentially affecting 55 stations. This has major adverse implications for safety and security, which in turn may lead the government to consider closing down many stations.

The government has also agreed to bankroll Reliance Rail, the company building 78 new double-decker trains for the Sydney network, for $175 million. The previous Iemma Labor government accepted the tender from Reliance Rail, a consortium that included the engineering firm Downer EDI, Macquarie Bank and Babcock and Brown.

The government failed, however, to properly scrutinise the consortium’s finances. After winning the contract the financiers paid themselves upfront success fees of $50 million. However, the tender relied on very heavy borrowings, and assumed that the project would run like clockwork. When it didn’t, the company streaked towards insolvency.

Last week the O’Farrell government stepped in with a very generous rescue package. The company replied that it would examine the figure to see whether it’s adequate. If they ask for more, they’ll almost certainly get it.

As one observer noted bitterly, it’s another case of “privatising the losses and socialising the losses”.

Developers rule, OK?

The O’Farrell government has set up a special taskforce to examine the sale or long-term lease of undeveloped land owned by government agencies, using public/private partnerships. Significantly, the taskforce is headed by banker Greg Levy and includes Louise Byrne, a barrister with a special interest in major property deals, and representatives of Macquarie Bank.

The taskforce is recommending the sale of inner-city land owned by State Rail and Sydney University for residential or commercial use, rather than for public services.

As a sweetener, the taskforce is offering to include some student accommodation in the new developments. However, what is proposed would, in effect, amount to a takeover of government land by the private sector and its incorporation into an extended central business district.

The taskforce is also considering wholesale acquisition of Sydney’s great historic sandstone government buildings. The heads of government departments affected would be “encouraged” to sell off other land or assets they own, in order to purchase or rent alternative accommodation.

Government architect James Barnett’s wonderful General Post Office has already been taken over by Macquarie Bank (there’s that name again). The State Treasury building has been turned into a boutique hotel, and that’s what is likely to happen to other historic government buildings, including the magnificent Lands and Education buildings.

There could surely be no more powerful symbol of the takeover of government services by big business.

The corruption leap-frog

One of the major reasons why Labor fell from power in NSW was because of its extremely close relationships with big development corporations. It appears that one of the reasons for the catastrophic rejection of Labor in Queensland was because of the proposed sell-off of government-owned assets.

Many voters appear to have thought they’d get a better result from the Liberal/National Coalition. But no! In NSW the O’Farrell government has used the corrupt behaviour of previous Labor governments as a precedent for their own initiatives in service of the corporate world. The new Newman government in Queensland is certain to do the same thing.

At the federal level the ALP and conservatives are still close in popularity polls, raising hope for a renewed coalition with the Greens, who are holding their own.  

Next article – Human Services offices swamped by floods and budget cuts

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