Sometimes I think privatisation of government monopolies gets discussed in a vacuum, free of context so all anybody has to do is fling figures around the abstract and settle on a deal in the abstract, thus letting the chips where they may fall in reality, far from the negotiating room. So far, since the late 1990s when NSW embarked on allowing competition in the marketplace for electricity billings, it has contributed to condition whereby we seem to be getting charged more, thanks to the gold plating going on with the electric companies. this has led to the Australian Competition Tribunal to step in and overturning a decision by the electricity price regulator that would have allowed the electricity price to group even more. Now, that intervention is being contested with a phalanx lawyers, trying to get back to charging whatever the hell they like.
A phalanx of about 40 lawyers representing electricity networks across Australia are attempting to convince three men – the members of the Australian Competition Tribunal – to overturn a decision by the electricity price regulator which would have rewarded NSW households with a $100 to $300 a year saving on their power bills.
And get this: because the electricity networks in some states are publicly owned, it is taxpayers who will pick up the tab for this legal free-for-all – rumoured to be as high as $90 million – which is also aimed at getting them to pay higher bills. Other states, where the networks are privately owned will also see the effects over time.
Also present in the room are two barristers for the Public Interest Advocacy Centre which with a modest annual budget of $3 million, is mounting the case consumers should pay even less than the regulator's edict.
The case has emerged as a fascinating window into just how far our economy strays from the free market ideal.
Electricity networks are, of course, natural monopolies.
In a competitive market, firms are forced to operate efficiently, and at lowest cost, lest their customers flee to their competitors.
Without this disciplinary force of a free market, electricity networks require a regulator to hold them to account, impose efficient pricing and keep prices as low as possible for consumers.
Every four years, the Australian Energy Regulator determines how much electricity networks can charge customers, based on what an "efficient and prudent" business would need to charge in order to cover its costs and make a profit.
Networks costs make up about half your household bill.
And there you have it - the very picture of how the electricity industry is one big rent-seeking enterprise, trying to set prices not by any relationship to the market but by how much it can gouge. It kind of puts to rest any notion that there is any kind competition going on; instead is abundantly clear that it is yet another oligopoly that has the power to set prices any which way it likes. Worse still, the current Coalition Government has created conditions whereby there is minimal investment in renewable energy, so things quickly reduce to minimal choices for the consumer, and every opportunity to collude and set any price they like, for the electric companies.
Compounding the problem further still is the desire by the NSW Government to lease out the poles and wires so they can "build more infrastructure" with the proceeds. So it goes without saying that the NSW Government wants to be able to gouge lots of money so that it looks good on the bottom line for investors to pay up for the poles and wires. Once it goes private, the private ownership will do everything in its power to push up prices to what the market will bear. Again, it is not clear how privatisation actually helps the public.
It is understandable that as a government monopoly, it is ripe for a sell-off and that the proceeds from the sale are desirable. It just doesn't seem to fulfil the bit where the government is supposed to serve all of its people, and not just the wealthy private interests.
What Infrastructure? WasteCONnex!?
There's a certain element of predictability about what the state government of NSW does when it comes to infrastructure - it basically builds big budget toll roads first and foremost, and not much of anything else. They do this because General Construction forms a vast rent-seeking lobby whereby they can promise jobs as well as the seeming appearance of progress, by building vast concrete structures. What's truly amazing about the WestConnex project underway is that it is being built without a business case for which to answer. In other words, the government is promising to spend oodles of money on project without really knowing if it is going to be productive or useful, but it's insisting on doing so because the people who stand to make lots of money at the public's expense are their friends. The Government is minimally interested in the collateral damage it is likely to cause, and all of it is centred around the notion that toll roads are good things.
I won't go into my usual complaint that the nepotism and crony-capitalism is a terrible thing (it is); I won't go into my rant about how medieval and anti-progressive toll roads are in concept (they are); or how self-serving the arguments are in favour of these things (God bless Adam Smith and self-interest); but I do want to point at the urban sprawl these developments are encouraging.
The NSW Government is saying, with its semaphore of policies, "go live out in the boonies 50km away from you jobs. We'll put in toll roads so you can pay $100 a week to go to and home from your jobs. But you get a backyard in a cookie-cutter suburb designed by the lowest IQ architects and town planners we could find." And they're not in the least bit ashamed that this is happening because hey, the electorate is so stupid they think they really want this too. And maybe it does - which goes to show we really get the leadership we deserve.
I've said this before but if you apply the simple cui bono test, you come up with the same old crony-capitalist rent-seeking lobby groups. If somebody goes with a proposal for rail - whether it be a high speed rail system or a metro network - the government offices immediately think they're some train-spotting rail enthusiast nut with little understanding of state finances. It really is quite barbaric. In the mean time it commits us to more cars, and rampant emissions and urban sprawl. If this really is our way of life, we need to change our way of life.
Cars Cars Cars
Speaking of motor transport, the Volkswagen scandal this week has been quite informative. The notion that there can be clean diesel combustion has taken a major hit as Volkswagen admitted to screwing with the emissions test with a bit of software.
I grabbed that screenshot from the WSJ to show just how much VW vehicles are over the various limits. We don't know if this kind of cheating is widespread, or whether it is just VW/Porsche/Audi indulging in this kind of chicanery. Anybody manufacturing a diesel model is now under a cloud. Sometime ago I read a report that Mazda had built diesel versions of their vehicles and while they could get fuel efficiencies up, it was harder for them to meet emissions targets, which feeds into the notion that maybe there's a lot of motivation to cover up emissions from diesel vehicles. Japanese manufacturers have been much slower in coming up with diesel as a cleaner option - they've tended to explore things like Hybrids, electrics and hydrogen fuelled cars; which tells you something about how hard it is to get emissions down on diesel.
Thus when you look at the overall picture, it is looking less likely that diesel cars are anywhere near as 'clean' as claimed. As a personal side, none of this surprises me. Next to big black German 4WDs, the biggest dickheads on the road seem to be guys driving VWs. You can easily tar the lot of them with the same brush and file them under dickhead consumers, dickhead corporation.
The NSW Government is saying, with its semaphore of policies, "go live out in the boonies 50km away from you jobs. We'll put in toll roads so you can pay $100 a week to go to and home from your jobs. But you get a backyard in a cookie-cutter suburb designed by the lowest IQ architects and town planners we could find." And they're not in the least bit ashamed that this is happening because hey, the electorate is so stupid they think they really want this too. And maybe it does - which goes to show we really get the leadership we deserve.
I've said this before but if you apply the simple cui bono test, you come up with the same old crony-capitalist rent-seeking lobby groups. If somebody goes with a proposal for rail - whether it be a high speed rail system or a metro network - the government offices immediately think they're some train-spotting rail enthusiast nut with little understanding of state finances. It really is quite barbaric. In the mean time it commits us to more cars, and rampant emissions and urban sprawl. If this really is our way of life, we need to change our way of life.
Cars Cars Cars
Speaking of motor transport, the Volkswagen scandal this week has been quite informative. The notion that there can be clean diesel combustion has taken a major hit as Volkswagen admitted to screwing with the emissions test with a bit of software.
I grabbed that screenshot from the WSJ to show just how much VW vehicles are over the various limits. We don't know if this kind of cheating is widespread, or whether it is just VW/Porsche/Audi indulging in this kind of chicanery. Anybody manufacturing a diesel model is now under a cloud. Sometime ago I read a report that Mazda had built diesel versions of their vehicles and while they could get fuel efficiencies up, it was harder for them to meet emissions targets, which feeds into the notion that maybe there's a lot of motivation to cover up emissions from diesel vehicles. Japanese manufacturers have been much slower in coming up with diesel as a cleaner option - they've tended to explore things like Hybrids, electrics and hydrogen fuelled cars; which tells you something about how hard it is to get emissions down on diesel.
Thus when you look at the overall picture, it is looking less likely that diesel cars are anywhere near as 'clean' as claimed. As a personal side, none of this surprises me. Next to big black German 4WDs, the biggest dickheads on the road seem to be guys driving VWs. You can easily tar the lot of them with the same brush and file them under dickhead consumers, dickhead corporation.
But hey, we want to build our future cities around dirty big toll roads going out 50km to outer-ring suburbs where people can drive to commute every day. What could possibly go wrong?
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