Two weeks ago I hopped into Bob Carr for claiming to have retired $10 billion of debt whilst Premier of NSW. A response came through the Macquarie Bank consultant’s office making the following points:
Mayne is confusing general government debt with the debt of various entities that is managed by T-Corp. What counts is net debt. Currently there is a fiscal downturn after a decade of growth in NSW revenues. But by retiring $10 billion in debt during the growth years — when revenues were growing strongly — Carr and his two treasurers planned for the future. You reduce debt when times are good. JFK: “The time to fix the roof is when the sun is shining.”
This all sounds very plausible but is left utterly exposed by last week’s proposed sharp increases in NSW electricity prices. This is because Carr did not really “retire” any debt. He simply shifted it onto the likes of Energy Australia and Sydney Water — the bodies that were meant to be providing vital infrastructure for his citizens.
Getting state-owned enterprises to borrow up big to make additional contributions to the state budget is precisely what the Cain-Kirner government did in its dying days. The next step is borrowing from state super funds. Kirner even borrowed $50 million of the $80 million in assets set aside for parliamentary pensions — something the Fairfax press has never reported.
These raids on government enterprises are an act of reckless desperation, especially when it leaves the businesses without the financial wherewithal to maintain water and power infrastructure.
Michael Pascoe was right on the money last Thursday when he wrote:
Funny what happens once an election is out of the way. Suddenly NSW households are facing a 26% rise in their electricity bills over the next three years, small businesses will pay $1,000 a year more from July.
Given the current fantastic market for infrastructure assets, it is remarkable that our political duopoly in NSW both rejected electricity privatisation during the recent state election campaign. Surely it’s a better option than slugging consumers to solve the emerging financial disaster that is Bob Carr’s great legacy.