The feral fringe of state infrastructure policy

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The feral fringe of state infrastructure policy

May 31, 2012


IT IS a peculiar electoral arithmetic that has given NSW a government with a huge mandate and a clutch of fringe parties a blocking position in the State Parliament’s upper house. In the short term, there is nothing to be done but to deal with this reality. So the price of raising $3 billion for the state coffers is allowing gun fanciers to blast away at feral animals for their fun.

The Shooters and Fishers Party have traded their vote for the power sell-off, in return for recreational hunters being allowed to shoot pigs, deer and other feral animals in 79 of the state’s 879 national parks and reserves. Licensed shooters will have to apply for permission to shoot in these areas, which are not to be near metropolitan areas, certain types of wilderness or be world heritage sites. As such animals are already subject to culling by professional shooters in national parks, the hunters may actually augment the conservation effort – assuming they stick to the rules. The real outcome, of course, must be carefully monitored.

What is more significant is that the Premier, Barry O’Farrell, is ready to swallow some repeated promises to the public – never to allow shooting in national parks – in order to stick steadfastly by another: that he will privatise the state’s electricity generators. Given the state’s major infrastructure investment requirement, these ends justify these means. The state government’s has struggled to get traction with its micro-economic reforms. This deal with the Shooters is a welcome sign, albeit small, that Mr O’Farrell can stay the course.

The $3 billion from the sale of Eraring Energy, Delta Electricity and Macquarie Generation is certainly handy. Combined with the long-term leasing of Port Botany for $2 billion and the sale of the Sydney desalination plant, it allows NSW to cut its debt in preparation for the financing of badly needed new infrastructure.

But we know it’s not nearly enough. Australia was ranked 34th in a recent World Economic Forum study on the quality of national infrastructure in 2010-11, two spots worse than Slovenia. Infrastructure within NSW is grossly inadequate for the region that expects to be the pacesetter for the nation.

Yesterday’s deal is billed as a power selloff but the truth is barely that. With the power retailers previously sold, this tranche affects only the electricity generators. The refusal of the government to contemplate the more significant privatisation of the electricity distribution network until a second term means more than $30 billion of taxpayers’ monies will stay tied up in the poles and wires. Its stubbornness on this point has soured relations with the business community at a time when the private sector stands at the ready to invest in these assets. The government’s stance also means that Infrastructure NSW will continue to lack the funds to invest in the rebuilding of the state.

Mr O’Farrell is yet to devise a full agenda for funding our infrastructure needs in the absence of his political will on powerlines. As Infrastructure NSW and Transport for NSW near completion of their long-term plans, time is nearing for the Premier to lock in his funding plan and use his mandate. Yet his privatisation commitments remain small, his reform of the efficiencies in state bureaucracies remains modest and his commitment to opening up public services such as transport to contestable management contracts appears stuck in the depot.

The NSW economy has long benefited from having a mix of public and private service providers, whether it be in energy, motorways, health, freight rail companies, bus companies or port operators. More than ever it is clear the government has no role in funding assets and services where the private sector does better. The sale of assets such as power generators and more like it are essential if we are serious about investing in the state and national economies of tomorrow.

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