Hydro pledge water under the bridge

THE promise was unequivocal: "A Labor government will maintain the Hydro and the network businesses, Aurora and Transend, in public ownership."
That 1998 pledge - by then Opposition leader Jim Bacon - helped propel Labor into its first majority government since 1979. The Tony Rundle Liberal government's plan to flog off the state's hydro-electricity assets was a key factor in Labor's triumph.
But eight years later the pledge has slipped from the party platform. And it has vanished entirely from the memory banks of those it helped to power, not least Bacon's successor, Premier Paul Lennon.
This was Lennon's Treasurer, Michael Aird, on Thursday night, after The Australian sought clarification about whether Aurora and Transend were still covered by the Hydro pledge: "Let there be no misunderstanding here ... if necessary, we will consider the sale of Transend and Aurora."
Union leaders couldn't believe it. Unions Tasmania secretary Simon Cocker warned Labor would have a fight on its hands, while other unionists warned of all-out war. "How do you fancy being a war correspondent?" one quipped, darkly.
It is yet to be seen whether Lennon will risk such a damaging split within the labour movement, and potentially within the parliamentary Labor Party, to push through the sale of such assets.
The Hydro once owned all the state's power assets, from the dams and power stations generating hydro-electricity to the distribution infrastructure and power sales. There are now three companies: Hydro Tasmania (dams, power stations), Transend (high-voltage distribution infrastructure) and Aurora (power lines and sales to consumers). Aird says only Hydro Tasmania is safe from the potential fire-sale, with its offshoots fair game for Treasury's stocktake and bargain clearance.
Lennon is clearly testing the hydro waters. In 1998, Labor successfully persuaded the public of the need to protect all of the Hydro, even if it meant changing government. The question is whether since then the public has come to see Aurora and Transend as separate from "the Hydro".
The introduction of natural gas and the linkage of Tasmania to the national power grid via Basslink may have changed the power market. But union leaders are not convinced competition is sufficient to prevent a drop in standards and an increase in electricity prices should Aurora or Transend be privatised.
Wholesale asset sales are on the agenda in a state that, until now, largely has avoided them because of another spectacular Lennon U-turn. The Government this week finally admitted what opposition parties and doctors have long suggested: Hobart needs a new hospital to replace the ageing, crisis-plagued Royal Hobart.
A public-private partnership will be considered, along with asset sales, as a means of raising the cost, of $500 million to $1 billion. Senior players in Treasury and Government are cautious about such partnerships, however, and may opt for asset sales as a cleaner option. Politically, the sell would be simple.
Who can oppose asset sales if they are the best way to provide a badly needed hospital? The acid will be on those who do so to suggest alternatives; namely, turning away from Labor's successful debt reduction strategy to borrow the cash required or raising new taxes.
Coincidentally or not, the combined value of Aurora and Transend is estimated at about $1.05 billion. Betting agency TOTE Tasmania and TasPorts (sea and air ports) are other attractive privatisation candidates, although Labor's 2006 platform prohibits selling ports.
The Liberals were clearly caught off guard. After a deafening silence, Opposition Leader Will Hodgman eventually promised to support sensible privatisation. He could do little else, given the unpalatable alternatives and his party's history.
Only the Greens and Cocker dared suggest further debt or financing via superannuation funds as alternatives. So far the public has failed to hear the alarm bells sounding in union sections of Labor's Left. It's too early to tell if the public distrust of privatisation still runs as deep as a Hydro dam.