NSW electricity prices: up, up and away

Fourth, the government promises to use the funds to invest in public transport, hospitals and roads. Here's an idea: why can't all of those infrastructure projects be built by the private sector and operated by the private sector on behalf of the government? Why must the state for instance be involved in building, operating and maintaining hospitals, trains or harbour tunnels? Oh, and in the event say a private operator cannot build and profitably operate a second harbour crossing charging less than say $7 per car, the government, if it feels that $7 is too pricey, can surely reimburse car owners a fixed amount per crossing, say $2 for a number of years. Is that not a cheaper and more effective solution?

Many have been soothed by the premier's assurances that the assets will revert to the state at the end of the lease period. Fat chance, if NSW history is any guide.

In 1992 the Wran Labor government, in the face of public restlessness, leased the old Treasury Building on the corner of Macquarie and Bridge Streets in downtown Sydney, for 99 years. It now houses the five-star InterContinental Hotel. Seven years later in 1999, another Labor premier, Bob Carr, noting that the caravans of public disquiet had moved on, soldthe freehold on the hush hush. And the shenanigans that accompanied that sale raised more than an eyebrow.

For the five years from 2014-15, the state's electricity assets are projected to generate north of $5 billion in dividends and income tax equivalents for NSW. This is close to 38% of the projected $13 billion in expected proceeds from the sale. Or 45%, if you take UBS' figures.

Pro-sale propaganda from the government and its cheerleaders in Big Infrastructure intones that in private hands "prices do not rise further" or that "power prices are forecastto come down". Both are meaningless and unenforceable utterances that wouldn't stand up in a lamington drive.

Amongst the arguments for a sale, mention is often made that "strong regulation in electricity networks… will be embedded in the partial leasing".

What's wrong with strong regulations existing hand in hand with the current public ownership? This question has not been canvassed.

And assuming a sell off, where are the calculations showing that the nature of the inverse relationship between strong regulations and expected sale price? Naturally, the more

regulations a new owner is saddled with, the lower the price she will offer.

Think of buying a small house. Say you're willing to pay $X for it, after all, you plan to renovate it one day.

Now think of the same house that is sold with a caveat limiting its height or some other attribute. You will no longer be prepared to pay $X, will you?

On the topic of prices, the government's own song sheet of 18 December states: