Illustration: Michael Mucci.
The trouble with the latest round of state government privatisations is that those who oppose them do so for the wrong reasons, but their promoters are also pushing them through for the wrong reasons.
Joe Hockey's 15 per cent incentive payment to encourage ''asset recycling'' - selling existing government-owned businesses to fund the building of new infrastructure - has fallen on receptive pockets in the NSW and Queensland governments, which are worried about their credit ratings and, unlike the Victorian government, still have valuable electricity transmission and distribution businesses to flog off.
The previous government in NSW - a Labor government - tore itself apart over electricity privatisation, with the cabinet supporting it but the powerful public sector unions bitterly opposing it.
It wasn't much better with the previous government in Queensland, which was also Labor.
Now Labor is free of the responsibilities of office, it will be completely united in its opposition and its unceasing claims that privatisation will lead to big rises in electricity prices.
Since voters in all states strongly oppose privatisation, Labor will hope to do well with this argument at the NSW election in March. But polling also shows voters are much less opposed when the sale of businesses is linked to the building of specific new projects.
Labor's counter-argument is deceptively simple: government-owned businesses act in the best interests of their customers, whereas privately owned businesses seek to maximise their profits by raising their prices.
The truth is far more complicated than that. Whether publicly or privately owned, the monopoly business that doesn't seek to overcharge its customers has yet to be discovered by archaeologists. Monopolies that don't seek to maximise profits usually succumb to overstaffing and overpaying workers and managers. Why wouldn't they?
The public sector unions understand this full well, which is their real reason for opposing privatisation so vehemently.
They know that whether or not the private owner succeeds in raising prices, it will seek to improve its profitability by moving in on union perks and rorts. They know even Coalition-government owners give them an easier ride than a private owner would.
So voters would be mugs to believe Labor and its union mates have consumers' best interests at heart.
Unfortunately, that doesn't mean Coalition privatisers can be trusted to do their best by customers. The temptation facing all privatising governments is to seek to maximise the price they get for the asset they're selling.
If you can't see why that would be a problem, you're helping demonstrate why privatisations so often fail to deliver their promised benefits.
The main thing that protects customers from being overcharged is effective competition between the privatised entity and other businesses.
So the main way governments seek to inflate the price they get for a privatised business is to protect it from competition, or otherwise ensure its ability to overcharge. They tie the hands of the price regulator in some way, or explicitly guarantee freedom from certain future sources of competition, or sell the business to some player who already owns businesses in the industry and so can use the acquisition to increase the player's pricing power.
The simple truth that escapes so many privatisation supporters on the non-Labor side is that privatisation is only worthwhile if it leads to greater competition in the market. If it doesn't, it will be of little benefit to anyone bar the new private owners.
When the Keating government privatised Sydney airport, it guaranteed the purchaser first refusal on control of any second Sydney airport, thus virtually ensuring that even with two airports there'd be no competition between them.
When the Kennett government privatised Victoria's electricity industry in the 1990s it took care to ensure a wide range of buyers. But it seems the Baird government in NSW has no such scruples. It planned to sell Macquarie Generation, the state's largest power producer, to AGL, one of the state's three largest power retailers.
The Australian Competition and Consumer Commission tried to block the deal, judging it would have resulted in a substantial lessening of competition in the electricity market. But last week the commission was overruled by the Competition Tribunal, so the deal is likely to go ahead.
Only a couple of days earlier, however, the chairman of the commission, Rod Sims, reiterated his view that ''electricity companies have a strong commercial incentive to have all players vertically integrated … If electricity retailers can tie up most of the generation then they can create a stable oligopoly with high entry barriers and so higher prices and better returns.''
I'd be wary of believing any politician who tried telling you electricity privatisation won't lead to higher prices.