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National Affairs

Colin Barnett’s electrical albatross

6 March 2017

The WA premier has drawn the wrong lesson from Mike Baird’s 2015 election win

Right:

WA premier Colin Barnett and NSW premier Mike Baird at a Council of Australian Governments meeting in Sydney not long after the Coalition’s election win in New South Wales. Dean Lewins/AAP Image

WA premier Colin Barnett and NSW premier Mike Baird at a Council of Australian Governments meeting in Sydney not long after the Coalition’s election win in New South Wales. Dean Lewins/AAP Image


Facing a tough fight to retain office in Western Australia next Saturday, Liberal premier Colin Barnett seems to have looked to New South Wales for inspiration. The result is a proposal to sell 51 per cent of Western Power, which would raise about $11 billion. Of that amount, says the premier, $8 billion would be used to reduce debt, with the rest going into a fund for education and transport infrastructure. Something similar worked for former NSW premier Mike Baird, didn’t it?

Baird’s 2015 election campaign in New South Wales featured a pledge to lease 49 per cent of the state’s electricity transmission and distribution network to a private operator for ninety-nine years. Applauded by many commentators for his honesty and courage, the NSW premier swept back to power and set about fulfilling that promise.

You won’t be surprised to hear that the full story isn’t quite as simple, not even in New South Wales. There have been times when electricity privatisation has proved to be pure political poison in that state. In 1997, premier Bob Carr and treasurer Michael Egan were forced to abandon plans for a power sell-off after a divisive clash with the extra-parliamentary Labor Party. They unblushingly turned around and used opposition to the Liberal Party’s electricity privatisation policy to help win the 1999 election. Carr’s successor, Morris Iemma, initiated a push that would finally privatise the state’s generators and retail electricity businesses, but he destroyed his premiership and weakened the government in the process.

It’s true that Barry O’Farrell, who led the Coalition to a massive victory in 2011, privatised major assets such as ports without the same level of controversy. But his approach was incremental and non-ideological, and his wariness of further electricity privatisation ruled it out during the government’s first term.

Baird, who succeeded O’Farrell in 2014, was a different type of politician. In some ways he was not a politician at all, rather a reformer who saw politics as a slightly distasteful means to a worthy end. A true believer in small government and market forces, he was convinced that privatisation was in the state’s long-term interest and was determined to pursue it regardless of the political cost. He openly acknowledged that it could end his career – and, indeed, polling repeatedly showed that the majority of voters opposed selling off electricity assets.

But Baird had some things going for him. His government was seeking re-election for the first time and was relatively fresh and popular, particularly compared to a Labor Party still tainted by the cloud of corruption surrounding former minister Eddie Obeid. Baird himself was travelling extremely well in the polls. The gamble paid off, and the government was returned – but at a cost. It lost seventeen seats and Labor more than doubled its numbers from fourteen to thirty-four. If Baird hadn’t run on privatisation, the opposition might not now be in with a chance at the 2019 poll. Electricity privatisation didn’t throw Baird a lifeline; he hauled it aboard against the tide.

In contrast, Barnett is leading an unpopular government and must combat the time-for-change factor. Privatisation is guaranteed to make powerful enemies, especially in the unions, and few electoral friends. (A statewide ReachTel poll last week found that 58.7 per cent of respondents either disagreed or strongly disagreed with the sell-off plan.) It might allow Barnett to pork-barrel without facing the old cry of “Where’s the money coming from?” but voters tend to be increasingly cynical about politicians’ promises. Some will think that if they vote against the government, Labor will deliver the goodies anyway. And arguing that the sale proceeds are needed to reduce major debt also raises the inevitable response: who got us into this mess in the first place?

The swing of the electoral pendulum is not inevitable, and long-term governments can renew themselves. One way of doing this is by bringing in a new leader with fresh appeal. The WA Liberals have obviously rejected this option. Another method is via policy rejuvenation; by emphasising increasingly discredited free-market policies, the government has rejected this one too.

All over the world, the tide has turned against the Reagan–Thatcher policies of the 1980s. In the wake of Donald Trump’s presidency, some US conservatives have undertaken the quixotic task of trying to create a philosophical backdrop to the on-stage antics. According to reporter Kelefa Sanneh, in an article in the New Yorker, one advocate of “Trumpism” hassaid that he was frustrated by the Republican Party’s “devotion to laissez-faire economics (or, in his description, ‘free market uber alles’) which left Republican politicians ill-prepared to address rising inequality.” Regulatory interventions can be defensible not only “on narrowly economic grounds but as expressions of a country’s determination to preserve its own ways of life,” according to this long-time conservative, “and as evidence of the fundamental principle that the citizenry has the right to ignore economic experts, especially when their track records are dubious.”

In Australia, it is the federal opposition under Bill Shorten, rather than the Coalition, that’s benefiting from this tendency by espousing an economic populist approach that even 1930s NSW Labor demagogue Jack Lang wouldn’t be ashamed to propound.

In his policy speech on 19 February, WA opposition leader Mark McGowan showed that he has picked up on the trend. “We will keep Western Power in public hands,” he promised. “We will do so to keep jobs in WA. To keep an essential revenue stream for our government. To stop it from falling into foreign ownership. To keep service standards up. And to keep power bills down for WA families. WA is in desperate need of a fresh approach. Of new leadership.”

Politics in the twenty-first century is increasingly unpredictable and Barnett may yet win a third term. Nonetheless, the conservative parties in Australia need to realise that free trade, market-liberal economics and small government in an unadulterated form have had their day. The gains have been great but the tanks squashed a lot of innocent bystanders. •

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