My Daily Advertiser Op Ed column for 2 October 2018:
by ray goodlass
Put electricity back in public ownership to reduce prices
It has long been clear that the privatisation of the supply of electricity has been a major reason for our high electricity prices. Once the private sector is involved the need to maximise profits through high prices is of course the result.
It is also clear that retail competition, where companies compete for market share by discounting their prices, has not in any significant way reduced prices. The retailers, after all, still need to make a profit, so their discounts are at best superficial.
For decades, Liberal and Labor governments have sold us out by privatising our public services so big corporations can run them for their own profit, not for the public good.
The energy industry is a perfect example of how privatisation has failed us. While profits for the big three energy companies ballooned out by 54% last year, our wages only grew by 2%.
Putting the retailing of electricity back in public hands would remove the profit imperative and so bring down prices.
Calling for public ownership does not necessarily mean nationalisation, as community owned retailing would be a very attractive option.
Nonetheless, it was pleasing to see Richard Di Natale saying that the Greens would set up a government-owned retailer, Power Australia, that would save households $200 a year on bills.
Greens leader Richard Di Natale announced the policy last Wednesday at the National Press Club, the latest in a series of anti-privatisation pledges including the call for the re-regulation of retail power prices and the creation of a ‘People’s Bank’.
Remember when the Commonwealth Bank was exactly that? Or the State Bank of NSW, previously the Rural Bank, which was eventually privatised and taken over by the equally privatised Commonwealth Bank?
The Liberal/Nationals Coalition federal government has promised a default power price, while Labor has offered a capped price for electricity, as the three major parties bid to whittle away electricity retailers’ profits in favour of consumer savings.
These very welcome more interventionist approaches were sparked by an Australian Competition and Consumer Commission (ACCC) report last July which called for a default electricity price to help households and small businesses compare “misleading” discounts, the Guardian Australia reported.
Di Natale’s speech went a long way to position the Greens as the party of public ownership, which is good to see as Labor seems to have abandoned its previously core principle. The Greens leader said Australians want the government to “take back control of our economy” in essential services including banking, energy, health, education, communications and aged care.
“You don’t need to be an expert to see that big private companies, whose legal requirement is to maximise their own profits, should not also be handed the responsibility of looking after our health, our education, or even our ability to turn the lights on,” Di Natale said.
To put it quite simply, corporate interests should not be in charge of essential public services.
Di Natale argues that for-profit energy retailers have spent “our money mercilessly advertising back to us” allowing them to “capture profits instead of creating value”.
Customers are overwhelmed with information about complex, over-priced packages and often give up on finding a better deal.
The ACCC report, which found that residential customers pay around $273 a year in retail costs and profits, is the justification of the claim that a non-profit public retailer would save an average family around $200 a year.
Di Natale says Power Australia would help drive emissions reduction “by providing a guaranteed buyer for clean energy”. This is good news in that it would provide much needed certainty to the renewables sector.
Another central recommendation of the ACCC report was that the government should support the creation of power generation by underwriting new projects by agreeing to purchase electricity at about $45 to $50 per megawatt hour.
It seems that in addition to his call for the government to play “a much bigger role in the provision of essential services” Di Natale is signalling the reshaping of Australia’s economy so that it works for all of us, not just for the privileged few. It’s high time somebody did.