Thursday, August 28, 2008


Liberals pull the plug on power privatisation

Alexandra Smith, Brian Robins and Andrew West

August 28, 2008

BARRY O'FARRELL will deliver a humiliating blow to Morris Iemma's leadership today when he blocks the Government's plans to privatise the state's electricity industry and forces the Premier to back down from the proposal.

Mr O'Farrell's decision will derail the Government's infrastructure spending plans and leave Mr Iemma's leadership in serious doubt.

But it will also leave Mr O'Farrell exposed to attack from the business community, which has been a strong supporter of the privatisation, and weaken the Liberal Party's ability to attract corporate donations.

It is understood Mr O'Farrell told his Liberal Party room yesterday that it was too early to support the plan because the Federal Government was yet to finalise the details of its emissions trading scheme at the end of this year.

Mr O'Farrell also told the MPs that he did not feel confident that Labor could be trusted to properly spend the proceeds of the sale.

It is believed Mr O'Farrell reiterated the Liberals' in-principle support for privatisation, but stressed that it was too early to endorse the timing and sale process proposed by the Government.

While it is understood Mr O'Farrell did not have unanimous support in his party room, the majority of his MPs supported his stance.

Earlier yesterday Mr Iemma said he would walk away from privatisation if the bill was defeated in the upper house today.

"There's no plan B," he said. "We'll have to deal with the consequences of this having been defeated and respond. It's not going to be a case that we're going to be deferring this and coming back."

Last night, the Treasurer, Michael Costa said he would introduce the bill to the upper house today despite the Opposition's position.

"The legislation will be introduced, as planned. These are just excuses," Mr Costa said.

"The enabling legislation does not dictate the timing or the structure of the proposals, and the decision runs counter to the recommendations of the Auditor-General, who they wanted to vet the process.

"The legislation will be introduced, and they will be required to vote on it."

The Auditor-General, Peter Achterstraat, said in his report last week that the lack of clarity on a carbon trading scheme would affect the price that NSW would get for the sale of its power assets.

The bill is certain to be defeated in the upper house. Last night six upper house Labor MPs - Peter Primrose, Helen Westwood, Lynda Voltz, Mick Veitch, Penny Sharpe and Ian West - released a statement confirming they would cross the floor. The four Greens and the Christian Democrat, Gordon Moyes, will also block the legislation.

Mr O'Farrell's decision will also save the Premier from an embarrassing defeat in the lower house, where 12 Labor MPs were prepared to vote against the bill.

The Nationals also voted yesterday to oppose the legislation, and, although the position still needs to be considered at a joint party room meeting and shadow cabinet this morning, it is unlikely that it will face resistance from Opposition MPs.

Mr O'Farrell had maintained he did not want to split the Coalition vote and, once his National Party colleagues had indicated their opposition to the bill, it was expected the Opposition Leader would defy the business community and stymie the Government.

Meanwhile, Mr Costa denied allegations that he threatened to withhold funds from the electorates of Labor MPs who planned to vote against the power bill. Yesterday Mr O'Farrell referred the comments, allegedly made at an ALP meeting earlier this year, to the Independent Commission Against Corruption.

The Greens MP John Kaye told the Herald that when Parliament resumed today he would refer the Treasurer's behaviour to the Privileges and Ethics Committee of the upper house.

Mr Costa has denied having threatened his former cabinet colleague Kerry Hickey with the loss of funds for his Cessnock electorate if the Hunter MP voted against the power sale.

Mr Iemma defended Mr Costa yesterday but did not accuse Mr Hickey of lying. "At no stage did the Premier call Mr Hickey or anyone else a liar," his office said.

"It was alleged the Treasurer had made threats at a meeting six months ago. The Premier called the Treasurer, who vehemently denied the allegation."