Has electricity privatisation worked?

The Australian electricity sector was privatised, and you may wonder if this has been successful at reducing already inflated electricity prices.

A new report issued by Professor John Quiggan, a prominent Australian economist, sheds light on the situation.

Entitled "Electricity Privatisation in Australia: A record of failure," it was commissioned by the Electrical Trades Union and details the outcomes of power sales in both Victoria and South Australia.

Mr Quiggan found in actual fact the states that have been privatised reported not only the highest electricity prices but also the most consumer complaints going to electricity suppliers.

In these states, complaints jumped from over 500 to over 500,000 per year, with reliability also dropping in Victoria.

The report also details that resources have been diverted away from operational functions to management and marketing requirements. The results, according to Mr Quiggan, are higher costs with poorer service.

Electricity prices are rising as a result of privatisation, he says, since consumers are now bearing the costs of private owners' debt which sits at around 10 per cent per annum. In comparison, government borrowing costs were set at around three per cent.

Mr Quiggan added that twenty years of privatisation hadn't produced the results promised by governments.

"Prices have risen dramatically. A secure low-cost supply has been replaced with a bewildering array of offers, all at costs inflated by a huge expansion in marketing," he says.

His research into the sector describes privatisation of this industry as a "failure".

This report was released after Queensland government recommended full privatisation of the state power sector as the best way to reduce the state's debt burden while still leaving enough money left over for infrastructure investment.

The "Powering Queensland" report was released in October 2013 and states a full sale could free up between $40 to $48 million.

It claims that in 15 years of privatisation, Victorian consumers enjoy the lowest prices of any state in the national electricity market. It also states that around one in four household do an electricity comparison and switch providers each year, making it one of the most competitive markets of its kind in the world.

Queensland government's acting treasurer Scott Emerson told ABC it would not be selling any Queensland property before the next election.

Posted by Liam Tunney.