Snowy Hydro: The Backdown

You have to hand it to John Winston Howard. He's a bastard, but boy, he's a clever bastard. Today's revelation, made on Alan Jones' morning show, that the Federal Government was pulling out of the planned privatisation of the Snowy Hydro Scheme, was a typical Rattus Rattus masterstroke. In one fell swoop - watch the failed amalgamation of the Queensland Nationals disappear from the front pages! WorkChoices? What's WorkChoices? David Hawker's a crap and biased Speaker? Who cares - they're not selling the Snowy! And what a way to win back dissident Nats and reward Big Bill Heffernan for a career's worth of head-kicking.

Of course, Howard was fully aware of the import of his words when he told Jones: `It's now entirely on Morris Iemma's head'.

Was it what. Or perhaps, shared collectively across the heads of Morris Iemma and his Finance Minister, John Della Bosca, who was taking official responsibility for the sale.

What went on in those minutes following the announcement? The scene in Ye Olde Governor Macquarie Tower must have been utterly compelling. I know that as I listened to the radio and absorbed the news, you could hear a pin drop. What would happen? To cling on after the Feds had dropped away would be political poison - yet to drop out, two working days before the State Budget - with Snowy sale factored in - is handed down ...

The tension broke only ten or fifteen minutes later, when news came through that NSW had also reneged on its decision. Politically, it was the only possible decision - has there ever been such a wedge? But what are the further implications of the sale?

Snowy Hydro was corporatised in 1997. Inarguably, anyone who opposed the sale of the Snowy probably should have opposed corporatisation, because technically, all shareholding governments have been able to divest themselves of shares since this point, and the only reason the sale was proposed in the first place was because Snowy Hydro wanted to do exactly what corporations are legally obliged to do - expand and make more money, not provide services. It was the corporation that approached the government proposing that greater capital investment was required to expand the business, and as they saw it, this might be better funded by the private sector than the government. In essence, the argument is the same as that made for selling a car once the cost of repairing it exceeds either the value of the old car or the cost of a new car.

Was this case more compelling than the argument that if you sell an asset once, it stays sold? It's hard to say. And of course, if we ran our lives following the business case, we would have no beautiful buildings, no film industry (in fact, no artistic industry of any sort), and no state icons. But the real error lies, as it so often does, in the corporatisation of our essential services. As soon as a utility is obliged to make money rather than provide our water, energy, communications or transport, the provision of services becomes a secondary responsibility. And privatisation becomes virtually inevitable.

Steve Whan, the State Labor Member for Monaro, has been one of the most vocal opponents of the sale - not surprising, given that the Snowy Hydro is in his electorate, and that he stood a serious risk of losing his seat over the sale. As part of his campaign, Whan released a question and answer sheet outlining his position, which was this: people will not like this move, because Snowy Hydro is an icon. However, the sale will not mean that the water no longer belongs to the people of NSW, it will not change access to local waterways or National Parks, environmental flows, or the rehabilitation of the Snowy River.

For the upcoming NSW Budget, Whan's answer to the following question is one for which the answer will, ultimately,

Why do the NSW, Victorian and Federal Governments feel they have to sell Snowy Hydro

Snowy Hydro has argued to all three governments that unless they are able to expand the company into gas fired generators and other electricity related businesses their business will start to decline and they will stop making profits and have to lay off staff ... The NSW and Victorian Governments believe that the hundreds of millions of dollars needed to fund this expansion should not come at the expense of new schools and hospitals.

The question is - what will happen to these `new schools and hospitals'? Someone has to lose out as a result of the sale not going ahead. I have no doubt that Treasury boffins are working through the night to balance the books in time for Tuesday's Budget, and what gets the chop might be devastating. Even state icons.

I'm certainly no fan of privatisation, but like so many political decisions, this is one that illustrates the rare brilliant quote from `Commander in Chief' - very much the poor cousin to `The West Wing' - which has stuck in my mind ever since I heard it: the opposite of wrong isn't always right.