Plans to sell a big chunk of NSW's electricity system create an open rift within the Labor Party
KEY POINTS:
The battle raging in Sydney is about power in two dimensions.
Ostensibly, the row between the Iemma Labor Government and its own party conference is about whether to privatise sections of the state's power industry. The Government, led by the Premier and the Treasurer, Michael Costa, are determined to do so and the state parliamentary Labor Party has endorsed the proposal.
Under the proposal, the state's electricity generators would be sold off (in part or in whole); the industry's retail sector would also be privatised, but the transmission element - the poles and wires - which is the most profitable, would be retained in public hands.
The party conference took a different view. Meeting last weekend and led by party president Bernie Riordan (from the Electricians' Union) and Unions NSW chief John Robertson, the party voted down any privatisation in the industry. The background is that a similar proposal by Premier Bob Carr and his Treasurer, Michael Egan, was defeated a decade ago.
As former Prime Minister Paul Keating pointed out in the Sydney Morning Herald a few days ago, in an article supporting the State Government, this has resulted in some A$20 billion ($24 billion) in the value of the electricity assets disappearing from the table. So, the argument is very much about power.
But, of course, the other dimension is about power in the Labor Party itself.
Under the party's rules, the conference is the ultimate authority on Labor platform and policy. So the Carr Government's proposals were stillborn. Not so for Morris Iemma, it seems. In a gutsy performance, the Premier faced down his own conference and said the Government would still proceed with the privatisation. While he remains open to discussion and consultation, as far as Iemma is concerned the decision is made.
This has sent a shockwave through the ALP, which has not seen a confrontation of this kind since Jack Lang was premier in the 1920s and 30s. One branch, in inner-city Alexandria, has even gone so far as to charge the Premier and Treasurer with breaching the party rules, thus jeopardising their membership in the ALP itself. Temperatures have risen.
At the conference, this led to spirited and heated debate. The theatre of Labor gatherings of yesteryear returned with a vengeance. In particular, Costa, a former secretary of the Labor Council (now Unions NSW), received a rowdy, if not hostile, reception.
The Prime Minister, Kevin Rudd, spoke the day after the privatisation debate. While behind the scenes, the PM has endeavoured to assist in resolving the issue, he confined his remarks to calming the situation and a call for unity.
Unity, however, is proving elusive.
While Iemma, according to participants and observers, handled his parliamentary party room on Tuesday in a masterful manner, the issue is still far from resolved. A meeting of Labor's joint campaign committee, involving parliamentary leadership and party officers, convened on Wednesday to find a way forward. More discussions will follow.
Without a negotiated settlement, the Government can either act in defiance of its own party's resolution or the unions will be perceived as having dictated an outcome to the Government. Neither is the stuff of electoral success.
Before the conference, quiet discussions involving Education Minister John Della Bosca (from the party's right) and Primary Industries Minister Ian Macdonald (from the left) had neared a solution. And a solution is still achievable.
Settlement could be based on the understanding that joint ownership, involving public and private sectors, could hold the generation assets. The retail assets could be privatised and the transmission system could be retained in public hands. This might not be the best outcome but would certainly be far better than the current circumstance.
Business, in the form of a lobby group led by Sydney First's Patricia Forsythe, has been supportive of the Iemma Government. But this row has been fought out entirely in the ranks of the Labor Party.
In part, this is a reflection of the weakness of the conservative state Opposition. To the amazement of everyone, the Opposition does not actually have a position on privatisation of the power sector. Opposition leader Barry O'Farrell talks in terms of wanting to see what the vehicle looks like before passing judgment. Someone might suggest to the Opposition that they could design a vehicle themselves and put it on public display. But alas, politics in New South Wales exists in a vacuum where the Opposition simply reacts to the Government.
All of this stands to Iemma's advantage. There is no doubt his courage has earnt him some marks with the commentators, if not the electorate.
His standing in the polls has been lagging and it may just be that the image of the Premier confronting the trade unions and the party conference may see him recover standing.
A negotiated settlement would resolve one of the power issues.
The other, over who constitutes the ultimate authority in the Labor Party itself, has actually been resolved. The capacity of the conference to veto government legislation is only really effective where it is used in bargaining.
Exercise the power and its ramifications are so appalling that a government can only respond by ignoring or dismissing the resolution in question. To do otherwise invites electoral calamity.
The Labor Party cannot be seen to be acting at the behest of trade unions alone. This would be a gift of such magnitude to the conservative parties that even the state Opposition would be able to maximise electoral advantage.
So the Iemma Government must not be seen to back down to industrial pressure. But it does need to be aware of the fact that the Labor Party's base is less than impressed with the manner in which the privatisation issue has been handled. Or not handled, as the case may be.
Costa, like his friend and mentor and predecessor, Egan, has driven an agenda on which the public policy arguments are impeccable. The Keating Government's creation of a national power market in 1992 made ownership in the power sector irrelevant. It is the rules of competition which now deliver better services to consumers.
And Labor governments elsewhere, especially in Canberra, have not been slow to privatise where they thought it appropriate. A glance at Qantas and the Commonwealth Bank demonstrates this beyond doubt.
So the last week has seen momentous days in the history of the New South Wales Labor Party. Power has shifted. And not just in the electricity industry.Stephen Loosley, a former federal president of the Labor Party and a senator, chairs the business advocacy group Committee for Sydney.
