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Governments are buying up where the market has failed. Is this the end of privatisation?

TJ Ryan Foundation Board member, John Quiggin, comments in The Guardian (5.7.17) on recent government interventions and investments in various ailing industry sectors. He asks whether this is the inevitable chaos that follows the collapse of a dominant orthodoxy, but cautions that it shouldn’t be seen as a new dawn of socialism.

'Australian governments are back in business. Every couple of months, it seems, we hear of a new venture into public ownership of business enterprises, or an expansion of existing enterprises. Most recently, Victoria’s Labor government has announced the purchase of a sawmill in Gippsland to stave off the threat of closure. Last year the South Australian Labor government announced it would build a gas-fired power plant and issue tenders for large-scale battery storage. After denouncing this action as socialism, Malcolm Turnbull reversed course and proposed a major expansion of the publicly-owned Snowy Hydro scheme.

'Queensland’s publicly-owned electricity retailer, Ergon, is actively promoting the development of renewable energy through power-purchase agreement, while its generation enterprise, Stanwell, has been ordered to restart Swanbank gas-fired power station to ward off the threat of summer blackouts.

'At one time, those on the political right would have denounced such measures as attacks on the free market. Now, more concerned with culture wars than with economic purism, they are getting in for their chop. Faced with an inability to compete with renewable electricity, the coal lobby is demanding that the Turnbull government should fund its own coal-fired power station.

'… The sudden renewal of interest in publicly owned electricity suppliers reflects a similar pattern of events. The combination of privatisation, disaggregation and market competition represented by the National Electricity Market has been a disastrous failure. This was obvious years ago, but only became undeniable after last year’s system-wide blackouts and near-blackouts. State and federal governments have discovered that, despite having handed control over the system to private operators and independent regulators, they still bear the blame when something goes wrong. Unsurprisingly, they have decided to step in to prevent future failures.'

 

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