Privatisation scoping studies should be released to inform public debate

If it hasn’t already been sent, I expect an email will be sent around Ergon Energy today decreeing that all whiteboards must be erased after meetings, after the embarrassing disclosure of privatisation planning to union officials via a whiteboard (see the Brisbane Times article Ergon privatisation notes discovered on whiteboard). The incident raises an issue I’ve touched on before: the amount of information available in the public debate on privatisation, which alas is less than necessary to have a properly informed debate (e.g. see my post from October Strong Choices plan mostly good policy, but light on detail of budget impacts).

The Government could make a large contribution to the quality of public debate on its proposal to lease out assets by releasing the scoping studies that were prepared by investment banks and corporate advisers such as Bank of America Merrill Lynch and Lazard. At the time of commissioning these studies last year, Treasurer Tim Nicholls noted “their findings will form the basis for a considered and mature conversation with Queenslanders about the future of these businesses.” But I’m unsure this considered and mature conversation has occurred yet. Not having seen the scoping studies, it’s hard to know to what extent their findings have entered the public debate.

The Government will not release the scoping studies to the public because it is claimed they are commercially sensitive. Certainly some aspects could be, particularly market soundings, where the advisers have tested the potential appetite of different investors. But a lot of parts of the scoping studies wouldn’t really be commercially sensitive – although, of course, they may be politically sensitive. I’d particularly like to know whether the scoping studies (or any other commissioned studies) contain an assessment of current inefficiencies in the different Government-owned businesses such as Energex and Ergon, and what steps could be taken, such as shedding excess labour, to improve the businesses. Information such as this would be of great interest to communities in regional cities such as Townsville and Gladstone, which may be impacted by efficiency measures.

The Government could release the scoping studies with truly commercially sensitive information blacked out. The commercial sensitivity defence for not releasing the studies seems dubious to me, particularly when you consider the major Government businesses being privatised, Energex and Ergon, are monopolies in electricity distribution with no competitors who could gain market advantage from the disclosure of sensitive information.

So the Government’s defence must depend on the risk that disclosing information in the scoping studies would result in lower bids from potential lessees of the assets. There is possibly a risk of this, although I’m sure any bidder would be well-informed by a number of consultants who are highly experienced in the operations of the relevant Government-owned businesses. So I think the risks arising from releasing the scoping studies are low. In any case, it is in the public interest for the studies to be released, so we can have a better informed debate on the benefits and costs of leasing out assets.

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2 Responses to Privatisation scoping studies should be released to inform public debate

  1. Jim says:

    Gene

    You are absolutely on the money with this post. The studies should be released. The major downfall of the State’s approach has been a lack of transparency, particularly when it comes to the proper analysis of the options. This approach has not been costless.

    1) The cost to Government is a loss of trust with the electorate.
    2) The cost to the public services is a perceived loss of relevance due to their absence in the analysis and debate.

    Meanwhile the net benefits / costs to the community are effectively not known. This creates a fertile environment for further misinformation and the political conspiracy theorists.

    I suspect the commercially sensitive aspects of reports are probably limited to the names of individuals and potential investors consulted as this infers some level of interest in the assets. However, your don’t need to be the equivalent of a Jedi Knight from the corporate sector to work out who the major players are likely to be. After all, companies like Singapore Power already own a big share of the transmission and distribution network in Victoria.

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