Sunday, August 31, 2008

NSW Power Sale Short-Circuit

This week saw some high farce in NSW politics. Premier Morris Iemma recalled Parliament early to sell NSW's electricity assets. However, the National Party flagged early that it would oppose the sale, because such a sale was certainly not in the interests of regional and rural people. This put the Liberal Party in a no-win situation. It's policy has been to sell ("privatise") electricity (& other) assets. The NSW Auditor-General had largely approved the sale, even though Premier Iemma and Treasurer, Michael Costa, had not put a minimum acceptable price on the assets.

In the end, Liberal leader Barry O'Farrell was caught between a rock and a hard place: follow Party policy; or keep the National Party happy and avoid long-term divisiveness. He chose to keep his Coalition partners happy. As a result, the sale legislation, having been introduced into the upper house, was withdrawn, and Morris Iemma stormed out of the lower house.

Such an embarrassment is usually politically unsustainable. Iemma and Costa quickly formed a Plan B - introduce a mini-budget to amend the lack of new funds, and sell the retail arms of NSW electricity at the same time. This, too, will have implications for the people of NSW:
  • the sale issue has become a political power play - for political parties, and for individual politicians & factions on both sides of politics.
  • it will create a new, privately run oligopoly, similar that run by oil companies. That is, there is a captive market and few companies providing the service.
  • the new private companies will have income and dividend growth for their business plan. This will be achieved through higher prices, and probably, new "fees and charges", similar to those imposed by banks.
  • High-yield dividends will probably be paid int he first 5-10 years to the owners by large borrowings against future income, increasing the debt-ratio of the companies, possibly putting them at financial risk like that experienced by the private owners of the private roads the Cross City Tunnel and Lane Cove Tunnel.
  • the sale has not yet incorporated how the Federal Government's carbon-trading scheme will affect prices, and the price to be paid for the assets.
  • the assets still don't have a highest minimum acceptable price for sale. It is entirely possible that Morris Iemma and Michael Costa could turn this into a fire-sale of assets of which they are custodians, but don't directly own, to satisfy their own political power agendas.
  • Their arguments for sale include the emotional blackmail of no new infrastructure investment, including for hospitals and schools. The NSW Labor Government has done little or noting of that in the last 12 years anyway! Their negligence should not be used to justify a need to make their budget look good.
People will be right to ask questions if Michael Costa, in particular, retires from Parliament with his lifetime government pension and benefits, and goes to work for a company involved in 'his' privatisation. he has already indicated he will retire before the next election (2011)

Barry O'Farrell and the NSW Liberal Party have their own conflicts to resolve: it is Liberal Party Policy to sell NSW electricity assets, but how would they do it, and not look like back-flipping, and how can this be reconciled to the contrary National Party policy.

However a 'sale' happens, the people of NSW will be worse off because of the actions of Morris Iemma and Michael Costa.


Sunday, August 24, 2008

It's What Politicians Don't Say

This week has been a typical week in politics: politicians avoid some questions, tell us only part of the truth, or perhaps, simply don't know the answers!

Republican US Presidential candidate John McCain was asked how many houses (dwellings) he owned. After a few stammered words, he said "I think, eh, um, I'll have my staff get back to you on that." Not knowing, or perhaps not wanting to discuss, how many homes you have isn't a good image for one who wants to run one of the biggest economies in the world. Turns out he has 10, including the ones held in his wife's name.

Back home, former Astralian Treasurer Peter Costello was definite when answering a question in Melbourne - he would definitely NOT challenge for the (opposition) Liberal Party leadership. But, again, he didn't say whether he would accept the leadership if it were handed to him on a plate by current leader Brendan Nelson. Dr Nelson is seen as weak, inept and lacking leadership by many.

In NSW, Premier Morris Iemma has been gloating about the NSW Auditor-General's report that found "no major obstacles" to the sale of state-owned electricity assets. But Mr Iemma did not say that the A-G had recommended a (realistic) reserve price be set, that his government has no current plans to set a reserve price; that the Federal Government's proposed carbon-trading scheme would have an effect on the price; that polls suggest that nearly 80% of NSW voters do not want state-owned electricity assets sold, because private companies in an oligopoly will always be more interested in profits than service in rural and remote areas (Telstra set the standard, there); that he is acting against his own Party's policy; or that up to 17 members of his own Government oppose the sale.

AS ususal, it is what the politicians don't say that is the most important aspect of their media massaging.


Friday, August 15, 2008

Olympic-Sized Tantrums

This week, as we watched some of the events at the XXIX Olympic Games at Beijing, we very quickly decided that we had become armchair experts at a considerable number of sports. "This is easy to judge", we said! We enjoyed watching, and supporting Australia's competitors, rejoiced in their successes & efforts; and applauded the feats of others who did well.

The "Olympic experience" in our living room has been tarnished though, by a number of tantrums / dummy spits / over-reactions / bad sportsmanship:
  • 3rd Place: China's attempts to block any bad news: protests over Tibet, the weather, ring-ins in the opening ceremony; and to restrict media reporting of anything other than how great China's games are.
  • 2nd Place: the Russian women's Beach Volleyball team. Beaten by Georgia, part of which country Russia had invaded, the teams "hugged" at the end of the match, but the Russians tried to belittle the Georgians in the press conference, were surly, and mumbled derogatory answers. Yes, the Georgians were born in Brazil, but have qualified to represent Georgia under Olympic regulations. Other countries have migrant representatives, too. the Russians appeared to be motivated by spite, and sour grapes at losing.

  • (Gold) Silver Medal:(unlikely to be beaten by anything else) Swedish Greco-Roman wrestler, Ara Abrahamian threw away the bronze medal he won in the 84kg Greco-Roman wrestling tournament. He'd argued with the umpire(s) in a match he lost to the eventual winner. He walked out immediately after receiving the medal, and before the other athletes had received theirs. He is reported to have said "I wanted to take gold, so I consider this Olympics a failure". It was truly a "gold-medal" dummy spit, and many will hope that the wrestling sports body takes appropriate action.
    (Photo: Ezra Shaw / Getty Images)

But graciousness and goodwill have been the hallmark of most athletes.


Olympic Post Script: 25-Aug-2008

There has been a change - a new, last-minute result. The biggest, and gold-medal-winning tantrum goes to the Cuban Taekwondo fighter, Angel Matos, who was disqualified after taking too long for an injury time-out: he kicked out at, and hit, an olympic referee. He, and his coach, have been given a life-time ban by the World Taekwondo Federation.

Full story at:

Wednesday, August 13, 2008

Banks Under Pressure To Lower Rates

It seems everyone believes the Australian Banks should lower their interest rates when the Reserve Bank (RBA) does: politicians, financial reporters, borrowers, and yes, the reserve Bank of Australia. It is expected that the RBA will lower interest rates, possibly at its September meeting. Core inflation is expected to fall slightly faster, returning to the 2% - 3% target by mid-2010, as the Australian economy cools. However, economic indicators such as business and consumer confidence measures are falling quickly, and retail businesses have suffered a sharp fall over the last quarter, as interest rates bite into family budgets.

The banks, however, are reluctant. After all, the (US) Federal Reserve has raised interest rates to ... shock, horror! ... 2%. Banks have borrowed overseas money cheaply, and on-sold some of it here at much higher retail rates. The banks will claim they need to keep charging higher interest rates because of "the sub-prime crisis" in the US. Well, yes, Australian Banks did buy packaged sub-prime mortgages. That was their commercial decision because they thought they saw easy profits, and probably failed to apply due diligence. However, most prudent people would question the decision to buy 2nd, 3rd, and 4th-rate mortgages, where the risk of defaults is much higher, as a high-risk, poor investment. That is a decision made by the banks, and they, their executives, and shareholders should suffer. Bonuses should be cut, not maintained and offered because of increased bank fees, and artificially raised interest rates. The Commonwealth Bank has just announced a record profit of $4.8 Billion, a rise of 7%, well above inflation, and despite write-downs for some sub-prime investments.

The ethics of banks, and some bank CEO's, are appalling! It might be time to consider a partially-regulated banking industry again.


Friday, August 08, 2008

Iemma's Privatization Fuse

The NSW ALP Administrative Committee, its most powerful body, today met with NSW Premier, Morris Iemma. He had previoously refused to attend to dicuss the issue of his, and Treasurer Michale Costa's, plan to privatize NSW's electricity assets. The upshot is an uneasy "truce" that gives Morris Iemma a back door exit: he did say that he was "still willing to negotiate" (on privatization).

He will be acutely aware that he needs to stay as Premier for another 12 months before he can access "long-term Premier" benefits in retirement. Michael Costa, his staunch ally in privatization, is also looking at his retirement. They alone told Caucus what it would think, raising the stakes, and the hackles of NSW ALP government members, members of the ALP, Unions, and the public. Perhaps the 'negotiations' will last that 12 months, whereupon Mr Iemma might retire from politics, take his added benefits; which include car, driver, and office; and pass the poisoned chalice of privatization to someone else, to be quickly dropped as a change in policy by the new leader.

Given the unpopularity of the proposed electricity privatization, many in NSW, unionists and others, would be pleased.


Sunday, August 03, 2008

Costello Still Deciding on Leadership

As the Liberal Party languishes in the whiteout that is the Winter Recess for Federal Oppositions, Brendan Nelson leaves for a 10-day holiday, just as Peter Costello returns from his holiday in warmer climes. Could Nelson's holiday be the political equivalent of Capt Oates' "I’m just stepping outside for a while and I may be some time..." suicide walk in the Antarctic?

Several senior Liberal Party members have voiced their support for ex-Treasurer Peter Costello just 1 day after Nelson's departure for his holiday. Among them are "Mad Monk" Tony Abbott, MP; and Senator Nick "Captain Crankypants" Minchin.

For his part Peter Costello is biding his time: will he retire from politics, or take up the challenge of Opposition leadership after 12 years as Treasurer? His book launch has been brought forward to September. There are some possible political reasons for doing so:
  • Costello wants the leadership, but on his terms. To be introduced at his book launch as now "Opposition Leader", sounds MUCH BETTER than just "soon-to-retire-not-involved-backbencher".
  • Costello could be waiting to be "invited" to take the leadership, without challenge from Malcolm Turnbull, or the incumbent Brendan Nelson. Such a bloodless coup reduces the public gnashing, although Turnbull would still be seething and plotting, rather like Brutus did for Caesar.
  • If he is not offered the leadership on a plate, it is unlikely that Peter Costello would challenge for it: he had ample opportunity to challenge for Leadership when the Coalition was in government under John Howard, and Howard had "promised" him the leadership. After the Coalition lost government in Nov 2007, Costello wanted nothing to do with leadership of the Opposition. He might still regard it as a poisoned chalice.
Will he? Won't he? Only Costello knows at this stage, but media straw polling shows more voter support for Costello than the hapless Nelson, or the golden pony Turnbull. He can certainly be more competent in Parliament, if he so chooses. WorkChoices, his inflationary budgets, and the last 10 movements in interest rates being up are his biggest pieces of baggage.

We won't know Costello's intentions until he chooses to tell us, perhaps by "rumours" leaked by supporters to the media, followed by a quick, clean kill. The smiling snake might yet be back.


Friday, August 01, 2008

Sonny Bill Williams Defection Irony

This week's defection from Rugby League to Rugby Union by (Canterbury, NSW) Bulldogs player Sonny Bill Williams has created considerable print, air and television discussion time, mostly by supporters of Rugby League.

Not one has mentioned the considerable irony involved in a league player defecting for money. In 1907-08, led by Dally Messenger, other Rugby union players deserted union to establish Rugby League ... for money! For years, Australian Rugby League pilfered union players to swell its ranks, including: Ricky Stuart, Michael O'Connor and Wally Lewis.

There is considerable irony, then, in a league player deserting the code to play rugby union ... for money$! Others, of course have already gone from league to union: Mark Gasnier, Lote Tuquiri, Berrick Barnes, Timana Tahu to name a few. Given its history, it's hard to see how league could complain ... it's EXACTLY what they did / still do.