The Iemma Government in NSW is now in unchartered waters. Can it survive the humiliating defeat that this Saturday’s State ALP Conference will inflict on its plans to privatise the electricity industry?

When former Premier Bob Carr and Treasurer Michael Egan were defeated on the same issue at the 1997 state conference, they accepted the decision of the party’s supreme policy-making body, climbed back in the saddle and continued to govern.

But Premier Morris Iemma and his Treasurer Michael Costa have elevated privatisation to an article of personal faith. They’ve virtually put their jobs on the line.

They have provocatively introduced the proposal in violation of current party policy and after explicitly ruling it out during the 2007 state election campaign.

The questions now being asked in Macquarie Street are:

1) How long can Iemma survive as premier?
2) Will Costa do a monumental dummy spit and walk?
3) Who can take over?

When parliament resumes next week, Iemma will face a turbulent Labor Caucus meeting at which MPs will demand that the new conference policy against privatisation be adopted.

State ALP president and electricians’ union general secretary Bernie Riordan delivered the coup de grace when he announced at the weekend that MPs who defy Iemma on privatization won’t be expelled or lose their endorsement.

He has effectively given the green light to the whole of the Caucus, left, centre and right, to oppose Iemma, Costa, Energy Minister Ian Macdonald, Ports Minister Joe Tripodi, Health Minister Reba Meagher and the handful of others who are devout privateers.

Iemma railroaded the electricity plan through Caucus last December but he has Buckley’s of getting it through next week. On present voting calculations, he has no chance of getting it through the upper house either: a combination of Liberals, Nationals, Greens and dissident Labor MPs will easily kill it stone dead.

That will leave senior Labor ministers like John Della Bosca and Eric Roozendaal, both former ALP general secretaries, voting alongside Fred Nile’s Christian Democrats and Shooters Party MPs.

Iemma and Costa, both economists, seem not to have grasped the fact that a sell-off in current market conditions is not only nonsensical but probably impossible.

There is no infrastructure outfit willing to buy the clapped-out coal-fired power installations at the price they are talking about – $15 billion.

And there are no investors interested in a purchase when Kevin Rudd’s federal government is engaged in a national plan to establish a carbon trading market. Who would possibly want to buy amid those uncertainties?

The rational and obvious thing to do is drop the sell-off plan and, as a consequence, lose Treasurer Costa. Now that’s a win-win if ever there was one.