South Australia

By Marshall, Vern | The Australian Journal of Politics and History, December 1999 | Go to article overview

South Australia


Marshall, Vern, The Australian Journal of Politics and History


January to June 1999

A sale at last! Well, a lease anyway! The long-running debate over the proposed sale of South Australia's power assets is again the central issue of the period under review. After sixteen months of tortured negotiation, the defection of former ALP stalwart Trevor Crothers MLC on 11 June, finally gave the Olsen Liberal government the majority vote it needed to pass its power privatisation legislation through a previously hostile parliament.

The South Australian government has been desperate to push through its $6 billion power assets privatisation in order to make a significant reduction in the State's $7.4 billion debt and because of a perceived risk to taxpayers of publicly owned power assets having to compete in the fiercely contested national electricity market. However, the legislation remained stymied in the State's Legislative Council, where the three Australian Democrat MPs and No Pokies Independent, Nick Xenophon, adamantly opposed the sale. The ALP has retained a strident anti-privatisation stance since -- in an election policy reversal -- Premier John Olsen announced the sale proposal in February 1998.

One rebel ALP politician, former ALP State Secretary and subsequently MLC, Terry Cameron, had already been expelled from the party for crossing the floor last August to support a sell-off. Nonetheless, his defection still left the government one vote short.

As part of measures to garner support for privatisation, the Olsen government had indulged in unabashed "carrot and stick" incentives. These included the offer of an extra $1 billion of spending, financed from sale proceeds, on education, schools and hospitals -- Premier Olsen apparently unaware of the extent to which this offer effectively diluted the "need to repay the debt first" argument in favour of a sale. Secondly, the government threatened a $100 million "power tax" if the sale bid failed, with the average household paying $186 a year in addition to their existing electricity bills.

In the days of high-drama for South Australian politics, Crothers threw the Olsen government the needed lifeline when he stunned party colleagues with the revelation that he harboured grave misgivings about Labor's opposition to a long-term lease. Reportedly, at an ALP Caucus meeting in early June, Crothers informed his fellow MPs that while he remained "utterly opposed" to an outright sale of the electricity assets, a long-term lease was a "different animal" and an option he was prepared to contemplate. The distinction between a sale and a lease -- even of the contemplated length of close to one hundred years -- apparently hinging on the notion that with an outright sale taxpayers surrendered the power assets totally, whereas a lease allowed taxpayers to maintain some theoretical ownership and some degree of control over the assets. The government's own advisers confirmed that a long-term lease would be likely to result in a discount of only about ten percent on the overall price compared with the expected return from a sale.

In the event, and conditional on government agreement about the future of power asset employees and on all lease monies going to debt reduction, Crothers crossed the floor to deliver Premier Olsen his long-awaited strategic victory on power privatisation. Crothers, a veteran ALP upper house MP and former Liquor trades union chief, promptly resigned from the Labor Party, pre-empting the certainty of an expulsion vote. Subjected to the inevitable vitriolic attacks from his former colleagues, Crothers defended his actions on the grounds of his desire to lift for once and for all the burden of crippling debt levels from the shoulders of both the ALP and the state, and also because of his anxiety about the future of South Australia's key employment-generating industries, particularly Mitsubishi Motors.

The original "long-term" lease proposal was that the power assets would be offered to the market under an initial 25-year lease, with the option of three further 25-year extensions, subject to Parliament approving these extensions after the next State election, due by November 2001. …

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