I recently had a fairly long twitter conversation with @ashghebranious about the problems causing high Australian energy prices. During that thread, it became clear that Ash knew more about the details of the problem known as “goldplating’ of the poles and wires” than I did.
He had some good information to share about the various players who have profited from this problem and the structure of the system. But, in my view, he was reluctant to look at the ‘big picture’ which is preventing Australia from solving this problem, which is basically the what I would call the “neoliberal consensus” about privitisation and deregulation.
By consensus, I mean consensus by those who lead the national debate – mostly our 2 major parties and the mainstream media, including the ABC. I don’t include in that consensus the Australian public, who would seem to hold quite different a different view, on average. My argument in this case was that ALP’s entrenched commitment to neoliberalism that hamstrings the party in dealing with problems like rising energy prices.
For the Gillard government this was a particular problem because, although Gillard did make frequent statements describing the problem of gold plating and its effect on electricity prices, she did not do very much about it. So she looked weak. Tony Abbott, on the other hand, was able to take the problem of electricity prices and offer a strong solution: axe the carbon tax.
Now granted, this solution was based on a lie: that the carbon tax was causing the electricity prices, when it fact it was a very minor factor compared to gold-plating. And yes, Gillard tried to counter this and yes, the Murdoch press were a major player in making sure that she wasn’t heard and Abbott’s lies were therefore believed by most voters. Ash and I agreed on all that.
However where we parted was that I believed Gillard could have done more, whereas Ash never conceded that. She could have instituted a major reform in the electricity market. And by electricity market, I include the infrastructure of the poles and wires which deliver the electricity to Australians. (Part of the discussion with Ash got sidelined because I didn’t make this clear enough I think).
Currently each Australian state has its electricity almost entirely ruled by private companies – those companies that Australians deal with directly like power companies, and other companies which own all the poles and wires and charge the companies for their use.
As far as I can see, all these companies and their share –holders are rorting Australians wildly. Electricity prices have risen by 40% in just a few years. And on the back of this, Abbott was able to sell his carbon tax lie by promising Australians relief from the pain.
When I asked Ash – an active ALP supporter – why all this sector has to be run by private companies rather than state governments – he mostly avoided the question. I even asked him directly whether he supports ALP’s ongoing commitment to privitisation of the energy sector. No reply.
What he did say, however, was that a reason that private companies should own the poles and wires rather than the state government was risk – in particular he mentioned bushfire risk.
By the time he wrote that, it was getting late and I felt the discussion was getting bogged down so I politely signed off. And Ash to his credit immediately did too (rather than smelling the taste of victory like some tweeps have and going in for the kill!)
However on reflection I think it deserves a reply. To my view, the bushfires provide an excellent example of why private companies are not inherently better placed than government departments to manage risk.
To start with, think of the state fire departments. They are fully government run, and the deal with fire risk all the time. In fact, its hard to think of anyone who better deals with bushfires than a state fire department! Do neoliberals think that this therefore means they should be immediately privitised, on the basis that a private company always deals with bushfire risk better? In fact some countries have taken privatisation to this extreme- and the results aren’t good.
Secondly, having helped many victims of bushfires myself in my job as a lawyer, I know a little about how private and public organisations responded to, say, the terrible “Black Saturday” bushfires that took hundreds of Victorian lives and destroyed millions of dollars in property.
On the whole, my impression was government organisations like Centrelink responded pretty well and quickly, despite the unprecedented nature of the fire. Even my state legal organisation, which was by no means designed to deal with fires, organised itself to respond the problem within weeks.
So how did private organisations fare in relation to these fires? Certainly not well enough to justify a claim that all private organisations handle bushfire risk better than public ones, in my view.
For a start, SPL Ausnet has been accused of maintaining its wires so poorly that its negligence contributed to the starting of the worst of the fires, and therefore contributed to the deaths of 119 Victorians and destruction of over 1,000 homes. No public government department in Australia has ever been accused of this type of behaviour causing chaos of this type, to my knowledge – certainly not related to bush fires. The court action resulted in a $500 million dollar settlement for victims.
I don’t know enough about this case to know exactly why SPL Ausnet neglected wire maintenance, but its fair to speculate that it was something to do with saving money. After all, a private corporation main reason to exist is to make money for its share holders, and one of the main ways to do this is to cut costs.
That’s just one company. What about others? Well, I do know that Australia’s big Insurance companies were roundly criticised for the way they dealt with the fires. Risk is, of course, their very business and where they make their money. I talked to dozens of frustrated Victorians battling one of these rich, wealth companies to try and get compensation for their lost house. I would not be confident to say these private companies dealt with the risk of bushfires in a way that was in the public interest.
Now, I’m not claiming the reverse – that every public department would deal with bushfire – or any – risk better than a private company. It varies. But I would say that to prefer private companies on this issue does not match with facts on the ground. Its a claim grounded in ideology, not evidence.
And one of the major problems with Australian politics as I see it, is that these sort of claims based on neoliberal ideology too seldom go challenged, due to the neoliberal consensus that pervades. The strong right wing media environment here supports this – politicians know they will get no support from News Ltd or Fairfax if they do open call out neoliberal tenets. They will be painted as “extreme” or “marxist”. Even the Greens, in the main, stay away from open debates around privitisation & nationlisation. While they at least refrain from openly advocating privitisation like the main parties, they so tend to sit on the fence and avoid the discussion when they can.
To get back to Gillard and energy prices, this is part of what made Gillard look so powerless as Australians suffered with high electricity prices. Because she was powerless. Neoliberal theory says you should interfere as little as powerful in a private market, even one as essential as the electricity market. These were private companies, and “Big Government” should let them look after things. So she was reduced to making plaintive calls that the companies should behave better. And state governments too were nowhere to be seen on this. No politician, it seemed, can do anything to stop rampaging electricity prices. Which leaves the stage wide open for someone like Abbott who at least offered something. Evil is what happens when good people do nothing, after all.
Am I communist? Do I want state owned everything, and queues for bread on every corner? Well, private markets are fantastic for giving us choice, branding, even innovation. I don’t want all icecream in Australia to be sold by the “Australian Department of Ice Cream”, I’d rather choose from a number of brands, prices, styles etc.
But in matters of essential services – public transport, water, electricity, even internet service- I lean towards delivery of services by a single government body, rather than a variety of private companies in a competitive market making profit for their private (often overseas) shareholders. A public government department, for all its faults, is not driven primarily by the profit motive, and it more answerable to our democratic political system.
Some like Ross Garnaut has made arguments that privatised electricity companies worked quite well, its only the polls and wires privatisation that screwed us -because they are natural monopolies. That’s not to say of course that a single government department wouldn’t do the whole lot better if it was properly managed.
Just think of the amount of money that is wasted through advertising, for example. All of us pay for Telstra to compete with Optus through hyper expensive internet ads, or the electricity companies to promote themselves through billboards. We pay for that, and for what good? What everyone wants is essentially the same thing – fast, reliable internet at the lowest cost possible. Reliable electricity at the lowest cost possible. A train that runs on time, works well and is cheap (or free). It’s not rocket surgery.
As you can see, I’ve got a bit to say on this that can’t be reduced to a few tweets. Thanks for reading this. And Ash, if you’ve got this far – thank you for your fine, informed and respectful style on twitter. May we lock swords again soon.