Private power costs counted
New research suggests the privatised electricity sector costs Australian households over $200 per year.
“Privatisation of the electricity industry has resulted in enormous increases in wasteful spending, including high-pressure sales tactics, excessive numbers of managers, and dizzying advertising and so-called ‘chase’ costs,” says David Richardson, Senior Research Fellow at The Australia Institute.
“The annual cost of these economically wasteful activities adds up to $2 billion per year. These costs are passed on to customers in their electricity bill, leaving households over $200 worse off a year.
He said the financial sector has also reaped huge rewards from power privatisation.
“In fact, the electricity industry now spends more on finance and banking costs than it does on the actual fossil fuels to power its electricity generators,” Mr Richardson said.
Its key findings include;
- Real output per employee in the electricity sector has fallen by 37 per cent between 2000 and 2018, due to the excessive allocation of ultimately unproductive labour to advertising, sales, contract administration and other activities associated with privatisation
- Productivity growth has been worse than for any other industry in Australia, contrary to the assumption that privatisation enhances efficiency
- The number of sales staff employed by electricity companies has grown almost 400 per cent since the industry began to be privatised in the mid-1990s and the number of managers has grown over 200 per cent
- Over the same period, the number of electrical tradespeople and other workers involved in actual production has grown just 21 per cent
- Electricity sector now spends more on finance and banking costs than the actual fossil fuels that power electricity generation