Academic journal article Journal of Economic Issues

Who Benefits from the Restructuring of the Australian Electricity Sector?

Academic journal article Journal of Economic Issues

Who Benefits from the Restructuring of the Australian Electricity Sector?

Article excerpt

The 1990s delivered a decade of structural change, with astonishing rapidity, to electricity sectors around the world (Bacon and Besant-Jones 2001). Australia has been at the forefront with its electricity restructuring being hailed by an Organisation for Economic Cooperation and Development (OECD) agency as a role model against which other countries should benchmark their own progress (International Energy Agency (IEA) 2005).

The structure and operations of today's Australian electricity sector bears little resemblance to that of a decade ago. Former government monopolies have been broken into multiple companies and funds from those sold have made a significant contribution to one of the world's largest privatization programs. Offshore transnational corporations (TNCs) dominate private ownership although it remains a government-dominated sector. A national electricity market (NEM) has been created, which also was pivotal to a nearly decade-long program promoting national competition and the basis for billions of dollars paid to State and Territory governments. Most consumers can now choose their electricity supplier and the number of wholesale buyers and sellers has risen exponentially.

Discourse about this sector's restructuring has been consistently framed within a context of regulatory change and the NEM being the driving forces (for example, Abbot 2002; Bardak Ventures 2005; Beder 2003; Booth 2003; COAG Energy Market Review 2002; Fairbrother and MacDonald, 2000; Quiggin 2002; Tagaza 1998; Willett 2005). This, I contend, produces an incomplete--and hence, inaccurate--conceptualization of the sector's transformation that is narrowly based around sector-specific changes. The Australian electricity sector's transformation has been shaped not only by these electricity-centric elements but also by the shift to workplace bargaining over wages and working conditions, the rapid growth of financial markets and new money forms, Australia's increasing global integration and a range of public sector policies including corporatization, market provision of infrastructure and privatization. The electricity sector's structure and operation, and the outcomes of the restructuring, can only be explained by considering all these drivers of change, introduced over more than a decade by the Australian state and all embodying the precepts of neoliberalism.

This can be shown using the analytical framework of the French theory of regulation, a theory of structural change that has the capacity to explain change emanating from multiple factors over a period of time, and to show a wide range of outcomes, as well as the stakeholder interests impacted. Regulation theory explains actual (not hypothesized) change--concreteness--by analysing the mode of regulation that secures accumulation, the process by which capitalism is reproduced and expanded over time.

Five institutional (or structural) forms comprise the mode of regulation, the dimensions of which are not limited to economic or quantitative factors and are defined by: wage-labor's relationship with capital, monetary and credit relationships, competitive relations between firms, international relationships and arrangements, and the form of state interventions including economic policy (Boyer 1990; Dunford 1990; Boyer and Saillard 2002). The five institutional forms, individually and their conjunction, provide a powerful analytical framework because an extensive range of factors is considered. This means that change outcomes are not limited in type (for example, to output, investment or employment) and a far more holistic picture of the change process is provided.

This analytical framework is also able to explain change at a meso or sector level by analyzing each of the five macro institutional forms before proceeding to determine the impact of each at the sector level and if there is any reflection of the macro forms through unique sector institutional arrangements to delineate a sector mode of regulation. …

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