KEY POINTS:
Margaret Thatcher once made the observation that some battles are so important they have to be fought more than once.
On the Labor side of politics in Australia, NSW Premier Morris Iemma is about to put that famous observation to the test.
The economic debate in Sydney has just begun to change dramatically. At the core is a renewed State Government emphasis on the privatisation of assets.
The catalyst for the revival is the report of Tony Owen, Professor of Energy Economics at Curtin University of Technology, to the NSW Premier on the looming demands of the state's electricity supply system.
The report is unambiguous. It recommends that NSW divest itself of its electricity generating and retail assets, either by sale or long-term lease.
This represents a major policy challenge for the Labor Government, as a similar effort to privatise the state's electricity assets by the Carr Government - with then Treasurer Michael Egan to the fore - was defeated at an ALP conference the best part of a decade ago.
The trade union movement, coalesced around the electricians, voted down the proposed change to the party platform and privatisation was stillborn.
So the recommendations will not be implemented without a severe test of the Iemma Government's resolve. Already, public sector unions are mobilising - although Iemma is less of a crash-or-crash-through politician than his colleagues, Bob Carr and Michael Egan.
The key question confronting the state in electricity supply is the construction of a new baseload power station.
Costs are expected to be in the range of A$12 billion ($14.14 billion) to A$15 billion. Even with the addition of renewables, a new baseload station needs to be online over the next five to seven years. Whether gas or coal, it is integral to NSW being able to guarantee electricity supply.
This is of intrinsic economic importance. But the electricity privatisation debate should not be seen in isolation. The discussion is much broader.
As Adele Ferguson reported in The Australian recently, not only NSW but Queensland and Tasmania are looking at significant privatisations. All states are, of course, ruled by Labor governments.
Historically, "privatisation" was a term of abuse in political campaigns. The battle lines were clear: conservative parties were in favour; Labor was opposed.
In the states in particular, Labor ran concerted campaigns against Coalition privatisation initiatives.
This argument grew thin during the long period of the Hawke/Keating governments in Canberra, where the Commonwealth successfully privatised assets ranging from airlines through defence industries to the Commonwealth Bank.
Indeed, it's doubtful that the success of Qantas or the Commonwealth Bank could have been achieved without the companies being placed in private hands and facing up to market pressures.
But to return to the current state of play. The Australian reported that Queensland was looking at the possibility of selling its power generation assets and Tasmania was looking to sell assets as diverse as Hobart Airport or the Southern Cemetery Trust.
What's more, as if electricity is not a substantive enough political argument, the NSW Government has been examining the possibility of privatising some of its transport assets as well.
This would involve the strong possibility of a direct confrontation with the transport sector unions which, like the electricians, remain powerful industrially and close to the inner corridors of power in the state's Labor movement.
Possibly, privatising transport is something of a matador's cloak for the Government's primary intentions in power.
As in most Western countries, privatisations have something of a chequered history in Australia.
In Victoria, the Kennett Liberal Government privatised the state's power system and reaped enormous rewards as foreign utilities arrived in strength.
Several had their hands badly burned. While the resulting injections of cash into the treasury coffers in Melbourne helped liquidate the state's huge debt, succeeding Labor governments, including the present Government under John Brumby, have been rather more cautious - recently rejecting overtures to privatise the state's water system.
The Commonwealth has seen privatisations under both major parties, with Telstra being the most obvious example. The fact that the Federal Labor Party has now dropped opposition to Telstra remaining in private hands is a sign of how the debate has evolved.
Privatisation, in the main, is no longer part of a grand ideological contest but rather a matter of efficiency and commercial returns.
Nonetheless, to win this argument over power, Iemma will need to be at his diplomatic best behind the scenes and at his most convincing in the public arena.
Officially, the Coalition parties in the NSW parliament support privatisation but there is no doubt that, like all oppositions, opportunity will beckon for point scoring.
Iemma's major fight, therefore, is within his own party. The Premier will need to spend considerable political capital to prevail in discussions with some of the public sector unions.
In this, his effective working relationship with the secretary of Unions NSW, John Robertson, will prove valuable. Iemma may also need to restrain some of his more enthusiastic privatisers, including Treasurer Michael Costa.
But already he is on more solid foundations than the last time such privatisations were envisaged, for the debate is more mature.
Overwhelmingly, the Australian experience has been that the privatisation of assets has led to more competitive and vigorous markets.
This helps explain why the Owen report was warmly welcomed by business, especially the peak industry body Infrastructure Partnerships Australia.
It's difficult to think of an example where a sheltered public sector enterprise has not performed better and with greater commercial success when it has been opened to the realities of the market.
By and large, Australians accept that privatisations are a necessary part of economic modernisation and liberalisation. In this sense, the debate within the NSW Labor Party is an echo of a battle long ago decided.
But a battle it remains.
That great pioneer of privatisations, Margaret Thatcher, would understand perfectly.
* Stephen Loosley is a former federal president of the Labor Party and Australian senator, chairs business advocacy group Committee for Sydney
