LETTERS: Electricity asset sales short-sighted

Tuesday, July 3, 2018

BIG SWITCH: The writer says experience has shown electricity prices increase and service declines when poles and wires are privately owned.IN A bid to be re-elected, the Baird government is proposing to sell the state’s electricity assets to fund a grandiose scheme of road, hospital and education improvements.

Any private company wishing to improve its operations would raise a capital loan by way of debentures or an additional share issue. The idea being that these costs will be amortised over several years by increased revenue from its customers.

Relating this to government operations, loans for capital outlays in a current year are repaid from revenue in future years from the population using the improved facilities.

The experience of electricity asset sales in Victoria and South Australia has shown that once in the hands of private providers, prices increase and service declines. Victoria experienced many blackouts initially. Many workers have also been laid off.

Governments are always better at providing essential services.

Although there may be an initial gain from asset sales, this is strictly a one-off and the government loses all future dividends from those assets. This is something to think about in the March election.

– George Aungle, Morisset Park

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