Comments on: Mr Speaker, I claim to have been misrepresented

By: SJ

SJ — Mon, 17 Mar 2008 20:06:14 +0000

By: SJ

SJ — Mon, 17 Mar 2008 20:04:55 +0000

I note that Kenneth Davidson agreed with the comments I made yesterday in a story in

ROSS Gittins (BusinessDay, 17/3) ignores the main reason why privatising the NSW electricity generating and retailing industry is not in the public interest.

The Government-owned generators in NSW set an effective cap on the wholesale price of electricity on the east coast, preventing the privatised Victorian assets getting the returns that were expected when they were sold at apparently inflated prices in 1995 to foreign generating companies.

Privatising the NSW system will make electricity on the Australian east coast more expensive, the supply less reliable and the whole operation more profitable…

Generators want the NSW Government out of the NEM to be able to game the market.

It’s a bit more complicated than that, but he’s done a good job of summarising in a limited space.

By: Fred Argy

Fred Argy — Mon, 17 Mar 2008 11:33:50 +0000

I meant to say Gruen was taking precisely “the right stance” on the NSW privatisation issue etc..

By: Fred Argy

Fred Argy — Mon, 17 Mar 2008 11:31:18 +0000

Whatever politicians might think and say, an economist needs to keep an open mind on privatisation. People on the socialist left (and I am certaintly not including Quiggin in that group) seem often to start with a presumption against privatisation (putting the onus of conclusive proof on the advocates) while people on the Right seem to start with a presumption in favour of privatisation (starting with “public choice” propositions and putting the onus on opponents to prove them wrong). I believe Nicholas Gruen was taking precisely this stance on the NSW privatisatin case – questioning silly arguments put by politiicans e.g. about AAA’s and the alleged intrinsic superiority of private ownership as risk bearers but keeping an open mind on efficiency issues.

By: SJ

SJ — Mon, 17 Mar 2008 11:09:04 +0000

So Standard Oil never existed? Microsoft doesn’t exist? Phew. That’s a relief. Whatever was I thinking?

By: Patrick

Patrick — Mon, 17 Mar 2008 10:26:03 +0000

SJ, that’s a ridiculous point of view. If the world worked the way you thought it did we would still be in the 1700s.

If existing participants to a market always had higher incentives to participate in related markets or to expand their participation inthe market then there would be no markets, just monopolies.

And I don’t think that the NSW government constitutes a serious competitor, either, except inasmuch as they get the advantages of writing most of the rules.

By: Peter Wood

Peter Wood — Mon, 17 Mar 2008 01:33:29 +0000

A problem with privatisation is that in the lead up to privatising the asset there is a perverse incentive to not properly regulate the industry so that the government can get a better price. I suspect that this might be a reason why the NSW government has stopped reducing the cap in the NSW greenhouse gas abatement scheme (GGAS).

By: SJ

SJ — Mon, 17 Mar 2008 00:18:10 +0000

Actually Patrick, I trust you completely, of course, but there’s a temporary glitch with my account. Instead of a cheque I’ll need small denomination unmarked bills, delivered to a phone box in Kensington. It’s standard procedure nowadays, BTW. Ask anyone.

By: SJ

SJ — Sun, 16 Mar 2008 22:45:46 +0000

Well, yes, Patrick, the potential list of bidders is large. A collective of buddhist nuns might submit the winning bid. But the incentive to bid high is largest for the larger existing participants. AGL, Origin, China Light & Power, and some of those on your list, like International Power. They’re the ones who stand to gain the most from a reduction in competition.

There’s money to be made from reducing competition. If you believe that people won’t try to take advantage of that, well, write me a large cheque and I’ll sign over ownership of the Sydney Harbour Bridge to you.

By: Patrick

Patrick — Sun, 16 Mar 2008 22:04:32 +0000

and by companies like AGL and Origin, who are looking to reduce competition in the market by removing the NSW government as a competitor.

What, and replacing the NSW government with Intergen, Macquarie, International Power, B&B, Temasek, Suez or whoever else?

Am I the only person to struggle to see the immediate advantage to AGL or Origin?

By: SJ

SJ — Sun, 16 Mar 2008 20:38:13 +0000

Gittins also proceeds from a Friedman style argument, that privatisation is good in and of itself.

But the task that Costa was given was to ensure the ongoing provision of electricity in an economically efficient fashion, and there’s absolutely zero evidence that the course he’s proposing is going to result in the outcome he was supposed to achieve.

Costa’s been conned by Treasury, where Chicago reigns supreme, and by companies like AGL and Origin, who are looking to reduce competition in the market by removing the NSW government as a competitor.

By: SJ

SJ — Sun, 16 Mar 2008 20:07:32 +0000

I can’t say I was very impressed by Gittin’s column.

We elect politicians to implement policies on our behalf. If a particular policy is a good one, it should be possible to explain why it’s good, without having to resort to lying about it.

And to criticise people who point out that the government is lying, whilst agreeing that the government is lying, as Gittins does, doesn’t do much for transparency in government. It’s more of an open invitation to incompetence and corruption, and we could do with a lot less of both of these things from NSW Labor.

By: David

David — Sun, 16 Mar 2008 20:04:53 +0000

I enjoy Gittins’ articles but sometimes I think he just thinks everyone is stupid.

By: CoreEcon » Blog Archive » NSW Electricity Privatisation

CoreEcon » Blog Archive » NSW Electricity Privatisation — Sun, 16 Mar 2008 10:31:15 +0000

[...] he is referring to John Quiggin and Nicholas Gruen and their demolition of the argument that the reason to have a sale of government assets is to [...]