ETSA sale block validates university research

Thursday, 25 June 1998

University of Adelaide Labour Studies researchers have welcomed the State Democrats' decision to oppose the privatisation of ETSA/Optima.

The Democrats announced their decision this afternoon following close consideration of the issues.

Instrumental in their decision was a report co-authored by Mr John Spoehr from the University of Adelaide's Centre for Labour Research and Professor John Quiggin from James Cook University's Department of Economics.

Professor Quiggin and Mr Spoehr conducted a detailed study into the economic and social impact of the proposed ETSA sell-off.

Their report argued that the sale of ETSA would cut off a substantial flow of income to the public sector and would most likely entail a huge loss to South Australia in the first 10 years following privatisation.

"ETSA would have to be sold for around $7 billion for the sale to be of any benefit to the taxpayer at all," they said.

"If ETSA is sold for $5.5 billion, as anticipated, taxpayers will be $660 million worse off at the end of 10 years than they would have been if ETSA were retained in public ownership."

The report also argued that the overseas experience of privatising electricity industries had shown that consumers gained little or nothing from the process.

Mr Spoehr says the Democrats' decision to block the sale of ETSA is a win for common sense and recognises the importance of independent economic analysis.

"This shows that the University can play a role in advising the wider community on the benefits and pitfalls of policy decisions. We are very pleased that, in this case, a political party has decided to listen to what we have to say ­ and we believe South Australians will be better off because of it."

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