LIBERALS RESCUE IEMMA

Coalition rescues Iemma

Alexandra Smith and Brian Robins, smh

June 17, 2008

MORRIS IEMMA last night caved in to the Opposition's central demand that threatened to wreck the Premier's attempt to privatise the power industry, paving the way for the $15 billion sale.

After last-minute talks yesterday, the Treasurer, Michael Costa, agreed to postpone the final vote on privatisation until September to meet the Opposition's demand that the auditor-general review the proposed sale and report back to Parliament.

Without Opposition support the Government had faced a humiliating defeat on the power sale, with up to 14 Labor MPs in both houses ready to cross the floor to oppose it.

The bill outlining the auditor-general's role will be introduced to Parliament this week and will be backed by the Opposition. Last night Mr Costa told the Herald that the agreement was reached after the Government held several meetings with the Opposition over the past few weeks.

"This doesn't change our sale timetable, which will see the first transaction proceed by the end of the year," Mr Costa said.

Mr Costa said Opposition backing for privatisation was always inevitable given its policy support for private enterprise.

"This was always the way it was going to proceed."

It is understood the deal was deliberately delayed until after the NSW Nationals conference at the weekend because the Government feared it would further inflame the Nationals, who are divided over privatisation.

A loss would have been a devastating blow for Mr Iemma, who came under fire from his party after he defied delegates at the state Labor conference last month and vowed to press ahead with the sale despite their opposition.

A Government source said the deal made Mr Iemma look like he was "hostage to the Opposition".

"I wouldn't call it a win when you have to postpone a vote because you can't get your own MPs to vote for it," the source said.

Mr Iemma is also under pressure over his handling of the Iguanas Waterfront affair.

As well as the auditor-general's report, the Government has agreed to a rural and regional communities impact statement and for an independent committee to oversee the way the proceeds of the sale are spent.

The Government has maintained that selling the state's power industry is critical to kick-start important infrastructure projects such the long-awaited M4 East and the recently announced North West Metro.

The Opposition said it would formulate its position on the sale after examining the Auditor-General's report but the deal would isolate those Labor backbenchers who said they would cross the floor to vote against selling the power industry.

In a statement, the Liberal leader, Barry O'Farrell, and the Nationals leader, Andrew Stoner, said the community safeguards should have been included from the outset.

"We welcome the Iemma Government's belated decision to put the public interest first, but this decision confirms Mr Iemma's weakness within his own party," the statement said.

"It's typical of Morris Iemma's dithering that he waited until the 11th hour when he could have resolved this matter by engaging the Opposition months ago."

Business groups welcomed the resolution last night.

"This is a major win for taxpayers and consumers," said a spokesman for Infrastructure Partners Australia, Brendan Lyon.

"The focus must now be on a well structured and speedy resolution that allows the public sector to reform the energy market as soon as possible.

"Further undue delay would be unwelcome."

The Opposition spokesman on energy, Mike Baird, said: "It's a good result for the people of NSW. Our role is to ensure a transaction of this magnitude is done in the interests of NSW. Hopefully the Auditor-General's report will provide that."