High cost of privatisation
by Anna Pha Remember all those promises of efficiency and savings that privatisation was going to bring? The South Australian Olsen Liberal Government embarked on a massive program of privatisation, in the past seven years selling off around 40 major public assets. What it couldn't sell, it contracted out. Even the Government's own data processing and computer systems were contracted out in a secret contract to the US corporation EDS. The biggest privatisation was the state's electricity supplier ETSA and its associated power utilities which were broken up and sold or leased to the private sector for a total of more than $5.3 billion. South Australia's power system is now controlled by companies from Hong Kong, Malaysia, the UK and the USA and several interstate companies. For example, Cheung Kong Infrastructure Holdings Ltd and Hong Kong Electric International have a 200-year lease! This included the retail side of the business, which it immediately sold to the Australian Gas Light Company in Sydney. One assumes for a handsome profit. Utilities Management Pty Ltd are responsible for company employees. US companies have 100-year leases for the Torrens Island Power Station and the power stations at Port Augusta and Leigh Creek. Other companies have contracts for generators, transmission, and so on. Consultants pocketed $90 million of taxpayers' money for giving advice on the privatisation of the State's electricity. And what did the taxpayers get for it? The cost of electricity to domestic consumers will rise, and services will deteriorate. Privatisation means that ETSA's main goal of electricity generation and supply as the provision of a service has been replaced as a priority by the generation of profits. Already the people of South Australia have been threatened with blackouts if they do not turn off appliances. It appears ETSA would rather have blackouts than draw extra electricity from the national grid during summer peaks because the extra electricity would cost more and eat into profits as they cannot pass the additional cost onto domestic users. The economic cost to the public of privatised electricity will add up to billions over the coming years. Consultants hit jackpot "Our hospital system is collapsing through a lack of funding, yet the Government has spent more on private consultants in three years than the entire capital works budget for hospitals over nine years", said Jan McMahon, General Secretary of the Public Service Association of SA. The SA Government handed out more than $100 million to private consultants in the last financial year alone. In the past three years, taxpayer handouts to private consultants came to almost a quarter of a billion dollars. The Premier hired 79 consultants in a single year! The lease of ETSA cost $55 million, distributed among 40 consultants. Two US firms, in particular, have made a killing. Morgan Stanley Dean Witter and Pacific Road Finance received more than $13 million in payments. One of the most controversial handouts is the $420,000 paid to a media consultancy which is part-owned by a close friend of Liberal Premier Olsen and who was a key adviser to the Premier during the last State election.
* * *Acknowledgements to The Review (journal of the PSA of SA) for information used in this article.