Parkin, Andrew, The Australian Journal of Politics and History
July to December 1998
South Australian politics in the second half of 1998 seemed to be trapped on a treadmill. Despite much strenuous effort, the scenery changed little. More than a year after the October 1997 election which had seen a chastened Olsen government returned to office, it remains constrained by its minority status in both houses of parliament, the Liberal Party remains bedevilled by internal divisions and the Labor Party provides little evidence of a capacity to provide a coherent alternative. The period under review was dominated by debate about the Olsen government's major policy initiative for 1998 -- the proposal to privatise the state electricity system -- and it ended with the debate seemingly no closer to a resolution than when it began.
Premier John Olsen's controversial announcement in February 1998 that his government wished to sell the state electricity system was discussed in the previous chronicle. On 30 June, Mr Olsen outlined details of the sale plan to Parliament. As currently organised, the state electricity system consists of the longstanding Electricity Trust of South Australia (ETSA), which is now the power distributor, and a recently-created offshoot, Optima Energy, which handles ETSA's former power generation operations. The Olsen government's new plan envisaged Optima as split into three separate generating companies (one of them to manage a new $500 million power station to be constructed at Pelican Point on the Lefevre Peninsula near Port Adelaide) and ETSA to be split into three separate transmission, distribution and retail companies. All six of these companies would be privatised. As transitional protection, electricity hills for domestic consumers would be capped at (indexed) current prices until the year 2003, and thereafter there would be continuing subsidies for country consumers. An independent regulator and Electricity Ombudsman would be established (South Australian Parliamentary Debates [SAPD] House of Assembly [HA], 30 June 1998, pp. 1162-6).
The government has a two-fold rationale for this proposal. First, it argues that the privatisation proceeds would substantially reduce state debt and hence the annual budgetary allocation for the repayment of principle and interest. Second, and more specifically related to the electricity industry, the government is keen to remove from the public sector an enterprise which will arguably be uncertain and risky under the new nationally competitive arrangements in the industry. Opponents of the program -- including the Labor Opposition and the Democrats -- dispute some of these arguments, doubting for example, whether the budgetary savings from reduced debt servicing would outweigh the loss of the revenue from ETSA's profit which is currently injected into the state budget. There are also some disputes about details: whether for example, it is prudent to construct the new Pelican Point generator rather than to invest in further transmission connectors to the cheaper electricity available from eastern states through the national grid.
In the House of Assembly, the Liberal Party occupies 23 of the 47 seats, and the Labor Party 21 seats. The remaining three seats, which happen to be contiguous eastern and south-eastern rural electorates, are held by minor-party or independent members: the National Party's Ms Karlene Maywald (in the Riverland seat of Chaffey), the "independent Liberal" Mitch Williams (in the southeast seat of MacKillop) and the "independent", but former Liberal, Rory McEwen (in the southeast seat of Gordon). The government's privatisation package, particularly its guarantees to rural consumers, seems to have been sufficient to ensure the support of these three crucial members. This has meant that the tactical focus of the ETSA/Optima debate has shifted to the Legislative Council. Here the October 1997 election left the Liberal government with ten of the 22 seats, with eight held by Labor, three by the Democrats and the final seat occupied by the "Independent No Pokies" member Mr Nick Xenophon. …