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Issue #1713      December 2, 2015

NSW power sell-out

The NSW government is pressing ahead with its privatisation program selling off the people’s assets. The latest announcement is the sale of electricity transmission company TransGrid to an 80 percent foreign-owned consortium.

Photo: Anna Pha

The Electrical Trade Union (ETU) and United Services Union (USU) which represent workers at TransGrid, have raised serious concerns about the impact on consumers, the loss of long-term tax and dividends, and the corporate history of some of the companies in the winning consortium.

TransGrid runs the high voltage transmission network across the whole state which is part of the national grid and electricity market.

Among the purchasers is Spark Infrastructure, which already owns vast parts of the Victorian and South Australian power networks, where it has been responsible for rising prices, cuts to maintenance, aggressive tax avoidance, a higher rate of disconnections, and blackouts.

ETU secretary Steve Butler said research by the Tax Justice Network revealed that Spark had not paid a cent in company tax during the past decade, despite owning highly profitable monopoly assets.

“We don’t need to speculate about what the TransGrid privatisation will mean for tax revenues, because we’ve already seen what Spark have done in Victoria,” Butler said.

“Prices have steadily risen for consumers, investment in infrastructure has crumbled, regional jobs have been slashed, and revenues that previously came to governments have completely dried up as the profits are aggressively shifted offshore.

“This consortium, which is made up of big banks, foreign governments and well-known tax avoiders, have just been handed the keys to the monopoly electricity transmission network that supplies power to the people of NSW.”

Butler said the sale would have a negative impact on the NSW budget over the medium to long term.

“Since 2005, TransGrid have paid $2.4 billion to the NSW government, money which has been used to fund infrastructure and essential services such as hospitals and schools,” he said.

“This sale puts an end to that sustainable, ongoing revenue stream, for a one-off payment that is a fraction of the $10.26 billion price tag the Premier and Treasurer are crowing about today.”

Butler went on to say the net proceeds of the sale would be around $7.3 billion after liabilities and sale costs were taken out.

“In their most recent annual report, TransGrid’s regulated asset base alone was valued at $6.19 billion, meaning the state will be a measly $1 billion better off due to this privatisation – or the equivalent of four years of dividend payments,” he said.

“Given TransGrid paid $306.5 million in dividends and tax equivalency payments to the people of NSW last financial year alone, this is an incredibly poor outcome that future generations will pay for in the decades to come.”

The people of NSW have lost yet another valuable asset. But there is more to come.

Preparing for next sell-offs

Since becoming Premier of NSW, Michael Baird has overseen the sale of $10 billion in public assets. He has handed over the Sydney desalination plant ($2.3 billion), Port Botany and Port Wollongong ($5 billion) the Port of Newcastle ($1.75 billion) and Macquarie Generation ($1.5 billion).

Next in line, apart from electricity transmission and poles and wires, are the Newcastle trains, ferries and buses. Sydney ferries are already contracted out to the private sector. It won’t be long before trains and buses follow.

The electricity assets are highly profitable revenue generating operations. They contribute billions of dollars to the public purse.

Workers in the utilities being given to the private, for-profit sector are battling to save their jobs as the government seeks to put them on a more profitable footing or, in the case of government subsidised public transport, have them turn a profit.

In the electricity sector alone around 4,000 jobs are expected to go.

The companies’ workforces are taking a haircut to fatten its profits in readiness for privatisation. The profits that will no longer contribute to government revenue but instead flow into private hands and more than likely go largely overseas.

The struggle to save jobs in the electricity sector is about more than fighting for workers’ jobs. It is about the future of reliable energy supplies, higher prices and the loss of government revenue.

The government claims it is about raising funds to build more infrastructure. By that it means more toll roads with private partners and roads to service new coal mines. The last thing the government has in mind is spending on public transport or public housing. Likewise public hospitals and schools will be even more short of funds.

As Baird sells off what remains of public assets the state will be facing sovereign bankruptcy, a situation created by the Coalition government and the Labor government that preceded it.

Unless the union movement and broader community combine to halt these privatisations and sackings, thousands more workers will lose their jobs and the cupboard will be bare.

Next article – Landmark victory

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