Electricity privatisation - record of failure

[boris1gary]

http://www.cpa.org.au/guardian/2014/1628/07-electricity-privatisation.html

Prominent Australian economist Professor John Quiggin has launched a scathing attack on energy sector privatisation, concluding that it has failed to deliver promised benefits for consumers.

Professor Quiggin examined 20 years of pro-privatisation reform in his report, “Electricity Privatisation in Australia: A Record of Failure” (http://johnquiggin.com), which included a detailed economic examination of the outcomes of power sales in Victoria and South Australia.

His research has revealed that many of the claimed benefits of privatisation have not been supported, with key findings including:

His research has revealed that many of the claimed benefits of privatisation have not been supported, with key findings including:

• price rises have been highest in states with privatised electricity network
• customer dissatisfaction jumped, with complaints to the energy ombudsman in privatised states leaping from 500 to over 50,000 per annum
• *resources have been diverted away from operational functions to management and marketing, resulting in higher costs and poorer service
• reliability has declined across a wide range of measures in Victoria
• promised increases to investment efficiency have not occurred
• real labour productivity has reduced as employment and training of tradespeople was gutted and numbers of managerial and sales staff exploded
• private owners are receiving unjustifiably high rates of return based on the low investment risk
• consumers in privatised states bear the cost of approximately 10 percent per annum interest on private owners’ debt, compared to substantially lower government borrowing costs of three percent.

[lakeland27]

 Why would someone buy a power company ? in order to profit of course, electricity is a necessity so people have to have it.

if an electricity provider is private it changes its reason for existing from a service provider to a profit -maker. the price can only go up.

if it remains a not for profit state enterprise sure it may become a little bloated, but that is more than offset by the extra jobs it provides, and the pressure to hike prices for shareholders is not there... some might argue that a state enterprise is inefficient in some respects, but the extra employment it can provide is no small consideration to a society obviously sorely in need of jobs. even if a state owned utility ends up charging the same price eventually the provision of more jobs and the subsequent spending of those wages does benefit small and large business alike. its a far more palatable outcome than enhancing the private wealth of a few.

however MM, the fact that they are public companies makes a stake a fair enough investment so i don't criticise owning a slice.. its just a pity it came to this that's all.

[fourandsixpants]

in reply to monman who states:

 ......and lack of forward planning apropos increase in demand/population by all governments when they owned the industry is the underlying cause of the steep price increases.

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No, prob not due to 'lack of forward planning' by govt bods, more likely due to the fact that the legislators take their commands/instructions from govt/parliamentary/departmental/ministerial advisors, who in turn take their instructions from govt ministers.....who have Jack Sh** experience in small/large business.

i.e how the heck can someone with a law degree....or a teaching degree or an arts degree....or a phD in economics etc WITHOUT having run a business themselves, possibly advise in areas of business?....and essentially 'run a business' successfully-which includes running it at a PROFIT?!!

[monman12]

I had to have a drink P007 after that (  Caribbean rum) because I agree with  what you wrote!!

So in an attempt to "stir": 

Turnbull has run a successful business ( merchant banking) e.g. In 1987, he established an investment banking firm, Whitlam Turnbull & Co Ltd, in partnership with Neville Wran (former Labor Premier of New South Wales) and the former State Bank of New South Wales chief executive, Nicholas Whitlam (son of Gough Whitlam, former Labor Prime Minister of Australia).

Another drink is called for, as I am feeling as heady as  the aircrew of a "chemtrailing" aircraft  might be after spraying at  flight level 350+, all over the globe!.

nɥºɾ

[fourandsixpants]

in answering monman and ref :

in reply to monman who states:

......and lack of forward planning apropos increase in demand/population by all governments when they owned the industry is the underlying cause of the steep price increases.

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No, prob not due to 'lack of forward planning' by govt bods, more likely due to the fact that the legislators take their commands/instructions from govt/parliamentary/departmental/ministerial advisors, who in turn take their instructions from govt ministers.....who have Jack Sh** experience in small/large business.

i.e how the heck can someone with a law degree....or a teaching degree or an arts degree....or a phD in economics etc WITHOUT having run a business themselves, possibly advise in areas of business?....and essentially 'run a business' successfully-which includes running it at a PROFIT?!!

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I had to have a drink P007 after that (  Caribbean rum) because I agree with  what you wrote!!

So in an attempt to "stir":

Turnbull has run a successful business ( merchant banking) e.g. In 1987, he established an investment banking firm, Whitlam Turnbull & Co Ltd, in partnership with Neville Wran (former Labor Premier of New South Wales) and the former State Bank of New South Wales chief executive, Nicholas Whitlam (son of Gough Whitlam, former Labor Prime Minister of Australia).

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So, why isn't Turnbull at the helm?