The killer blows coming to the VIC economy, page-18

In contrast, an Electricity Supply Association study of 1000 utilities around the world found that SECV was in the top ten for efficiency of resource use and that it was also highly efficient in terms of technical efficiency of distribution. And a study by London Economics in 1994 found SECVs resource efficiency compared favourably with best practice utilities worldwide (Cited in Anon. 1995, 4; Miller 1995, 6).

The SECV in fact delivered affordable electricity to consumers whilst making a healthy profit. In 1992/3, the year before it was broken up, ‘it paid $995 million in interest, a $191 million dividend to the State Government, and had a profit of $207 million’ (Skulley 1995). An Independent Inquiry into the Privatisation of Victoria’s Electricity Industry found that in the year prior to SECV restructuring, its debt-equity ratio was 342 percent compared with an average of 382 percent for the top 20 Australian companies on the Australian stock exchange. In addition a 1994 Bureau of Industry Economics study found that Victoria’s electricity prices to industry were eighth cheapest out of 40 OECD countries (Anon. 1995, 4). That Project Victoria nonetheless called for the privatisation, deregulation and corporatisation of the State’s electricity demonstrates its ideologically driven nature.

Competition decreased as incumbent players consolidated their power throughout Australia. By 2002 some 30 percent of the retail market was up for sale. The prospect of ‘re-aggregation’ in the industry increased as mergers and acquisitions occurred. Analysts now expect the number of retailers on the Australian east coast to fall from ten to only six by 2005 (Thompson 2002, 32). The deliberate disaggregation of the electricity industry to create competition is being undone by this consolidation.

Privatisation of electricity in Victoria had failed to deliver any increased generating capacity and generator breakdowns were threatening blackouts. Prices had increased particularly for low-income households. Ironically businesses too, which had been prime drivers of privatisation, suffered from rising wholesale prices after 2000 (Beder 2003, 236-40).

Such privatisation programs were not driven by popular opinion (Beder 2003). Instead of consultation the Victorian Government spent $1.8 million on an advertising campaign to promote the sale of the electricity industry. Nevertheless an AGB-McNair Age poll found that 60 percent of those surveyed opposed privatisation. A coalition of many church, welfare, environmental groups and unions – Public First — was formed to oppose privatisation of electricity, gas and water. A spokesperson for the coalition, Jim Ritchie, argued that privatisation would merely be ‘shifting the debt from the public to the private sector’ and provide ‘no incentive for energy conservation or moving to sustainable sources.’ (Beechey 1995, 11; Skulley 1995)

Project Victoria also had a clear anti-labour agenda. It called for large-scale public sector redundancies as well as labour market deregulation. In the words of the Tasman Institute’s Michael Porter, such strategies would remove ‘the ball and chain and the labour market practices that stop business… from prospering’. Privatisation was also seen as a way of allowing private firms ‘to get a piece of the action’ (Porter 2001) – and it is little wonder that the major beneficiaries of electricity privatisation were business interests.

https://www.herinst.org/sbeder/privatisation/ProjVictoria.html

If it wasn't so serious, it would be bloody funny.

Raider