The very foolish decision of the ACT Legislative Assembly not to permit the privatisation of the electricity retailing business of Actew appears to now be leading to further folly. The ACT Government, with one hard tied behind its back, is now negotiating a merger with Great Southern Energy which has about 240,000 customers in south-eastern NSW. Great Southern Energy is fully owned by the NSW Government. That Government, albeit a Labor one, is in the same boat as the ACT Government in that it, too, has been denied the chance to privatise, though in its case via party machination rather than legislative prohibition. Now both Governments are stuck with the grim prospect of entering a competitive electricity retailing market in the new financial year encumbered with the fetters of public ownership.
In the circumstances seeking a merger is about the best option available to the ACT Government, but the end result will be that the ACT Government will be part owner of a corporation distributing electricity in NSW. Surely, ACT taxpayers should not be involved in the business of interstate electricity distribution. And the question must be asked whether the ACT Government should be involved in retailing electricity in the ACT. Gone are the days when only government could undertake large scale distribution of utility products like telecommunications, electricity, gas and water. The private sector can do it better and pass on the fruits of competition to consumers.
Gas, which is similar to electricity, is distributed and retailed in the ACT by the private sector very efficiently.
The argument that government must delivery the necessities has always be spurious. Food and much of health care and education is delivered outside government.
The path which the ACT Government is being forced to walk down proves how wrong the Assembly was in rejecting privatisation.
We now have the pitiful sight of Labor’s employment spokesman Wayne Berry writing to 74 ACT organisations which have signed with interstate electricity providers pleading with them to return to Actew. He argues that as good corporate citizens operating in the ACT they should support Actew and help save jobs in the territory. This is putting it the wrong way around on two counts. First, Actew should be freed of the constraints of public ownership so it can compete effectively and maintain ACT employment. Secondly, businesses operating in the ACT should ensure they get all their business inputs as cheaply as possible so they remain competitive, in business and employing people in the ACT.
Why should the 74 organisations pay artificially high electricity prices, when lower prices would give them the chance to expand and create more jobs?
Mr Berry’s illogical pleading after the event shows how wrong his party in the Assembly was to knock back privatisation. We are now seeing before our eyes the leaching of ACT jobs and the lowering of value of Actew’s retail arm with the implementation of the national competition regime (over which the ACT has no control). It was predicted by the Government and informed observers at the time, but the Assembly was blind to it.
Jobs and wealth are not created by propping up inefficient, uncompetitive monopolies. The better model is for a number of entities to compete in distribution and retail and for the government to step back as a strong independent regulator protecting consumers. The government is unlikely to do that well while it is in the business of retailing. It will not stand for consumers if it is itself a supplier.
The Government and the Assembly should revisit Actew privatisation, and permit at least the privatisation of the retail part of electricity even if the electricity and water infrastructure remain in public hands.
Failing that, the ACT Government cannot sit by and watch the inevitable demise of an ACT asset. Unfortunately, it must now seek some economies of scale and engage in the risky business of being part owner of an entity that distributes and retails electricity into NSW as the lesser of two evils. But ACT taxpayers should be concerned about such a ludicrous prospect. The ACT government may as well get into the business of selling bottled water into South-East Asia, or computer software into America.