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Issue #1788      August 2, 2017


Left out in the cold

A report issued by The Australia Institute (TAI) earlier this month revealed just how electricity prices have soared over the past two decades compared with other prices. The TAI found that between December 1996 and December 2016 prices in Australia rose by 64 per cent but electricity prices increased by a whopping 183 per cent – almost three times the overall increase in the cost of living.

The media has had a field day running with sensational headlines of a national energy crisis. Faced with further price rises from July 1, the federal government has run for cover, announcing an inquiry by the Australian Competition and Consumer Commission (ACCC) into retail markets. The state governments show little interest in arresting electricity prices.

Whenever a government corporatised or privatised a public service or utility, there were promises of lower prices, greater efficiencies, higher productivity and improved services through such means as competition and deregulation. Private was inherently superior to public, so we were told. Electricity privatisation was no exception when it came to promises of lower prices and greater efficiencies.

But real life tells another story. “NSW electricity crisis: AGL, Origin and Energy Australia inflate profits,” runs a Daily Telegraph headline (27-07-2017). “Three electricity giants who control 90 per cent of the NSW electricity market are gouging customers to pay millions to fat cat bosses and hire thousands of new managers and sales people who never produce a single kilojoule of power,” the Daily Telegraph article says. Another headline in the same edition warns: “Households to pay up to $400 more for power.” Other media outlets predict price rises might be as high as $600 per annum.

In South Australia, prices are even higher. “South Australia will overtake Denmark as having the world’s most expensive electricity when the country’s major energy retailers jack up their prices this Saturday,” the ABC says, ringing the alarm bells. “Residential customers will see an average rise of 18 per cent under AGL, 19.9 per cent from EnergyAustralia, 16.1 per cent with Origin Energy.” (28-06-2017)

Electricity retailers are also raising prices in other states. At the same time it is revealed that the actual cost of producing electricity did not rise last year.

So what is the cause of these price rises? What is driving them? The answer is simple and starkly evident from the review carried out by TAI. Privatisation resulted in inefficiencies of mind-boggling proportions. For example, in November 1996, prior to the rash of corporatisations and privatisations there were 607 sales workers in the industry. By November 2016, this number had increased by almost five times to 3,008. The number of managers had more than tripled. These and increases in other areas reflect the massive and unnecessary duplication of roles and created a parasitic and bloated layer of management on fat incomes. (

The replacement of a public monopoly with a number of private operators did not produce greater efficiencies or lower prices. Nor did it produce genuine competition – only monopoly profits.

Thousands of people have had their electricity disconnected. Thousands more have turned to charities which are being inundated with requests for assistance. The high cost of electricity, cold winter months and soaring rents and unaffordable housing prices are driving more and more people into poverty.

At the same time pensions, unemployment benefits and the incomes of those on low wages have been shrinking, leaving millions of Australians without the means to pay electricity bills this winter. The slashing of weekend penalty rates could not have come at a worse time. The minimum wage has not been increased since 1994.

The ACCC inquiry is nothing more than a diversion, but it will not fool the millions of Australians struggling to keep warm this winter and pay electricity bills. There is only one way forward, that is the nationalisation of the electricity sector. Once in public hands, prices can be regulated, the profit motive eliminated and a sustainable future based on renewable energy planned and implemented.

Next article – Core immigration functions threatened

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