RAM did you not read my link.It was on the sell off of SA's poles and wires to the Chinese and how they were creaming in the profits.It was called gold plating then.But in September 2016 it turned out they were not gold plated.
Also you like bashing the NSW govt and their sell offs.Seemed they did pretty well with their sell off of poles and wires-
Lease of NSW electricity poles and wires raking in $2 billion more than expected - ABC News (Australian Broadcasting Corporation)
But a disclosure I know the fellow who did most of the negotiating very well so be careful what you say.
The price any income earning asset (especially a monopoly, and a regulated Govt monopoly at that) is sold at represents what a bidder thinks it is worth - agreed?
A regulated (Govt) asset that guarantees a return on capital invested is otherwise known as a risk-free return.
The State Govts (across Australia not just NSW but some have made it an art form) and the Federal Govt have been well educated on this - I saw the first presentation back in the late 80s from a certain well-known Sydney grown investment bank. It spelt out the process of ensuring a high price is received for any Govt asset sell-off. It does not matter what colour they are blue, red or green - their future on the public purse is what matters not the outcome for the community.
Ever done some research on the shelf companies associated with a public asset sell-off? There can be dozens, with a good number registered in declared tax havens for some reason. Say examining a 3 to 7 year period after privatisation so the dust has settled? Amazing how many ex-pollies or senior bureaucrats become directors of shelf companies say big water plant company 253 or big water plant company 254 for periods of 1 to 3 years and earn directors fees of anywhere from $20,000 to $65,000 for attending board meetings 4 times a year for a grand total of 47 minutes (for example) across all 4 meetings. Or that they may be a director on 2 or 3 or more of these shelf companies - so in 2 or 3 hours a year they earn multiples of those director's fees. They must be well-qualified to get those roles!
Back to the RPP Policy in use:
Take an example, spend say north of $36bn on additional capex on poles and wires (which encompasses what was done Australia-wide not just NSW but NSW was the poster-child for fake claims).
State entities from numerous states AND private companies
all testified before a Federal Senate committee and stated (at different times over several hearings over several years)
that Australia's demand for electricity AND every state's demand for electricity is and had been rising in an uninterrupted almost straight-line. Check Hansard. Yet not one of them was prosecuted nor lost their job nor was demoted - not one. A bit like the GFC and Wall St senior execs & directors.
Trouble is the National Electricity Market Operator (toothless tiger by design) had been publishing
those exact figures which showed that every state's annual electricity peaked & demand had been falling for some years and in certain states it was below levels of 5 or more years earlier.
Oddly enough though not one cent, let alone one dollar of additional capital proposed to be spent by State entities was knocked back by the respective regulator nor were the required price rises for every wholesale and retail electricity customer Australia-wide. -
That is the truth aka facts of the matter.
More recently, in some brazen price gouging/ramping - just before the privatisation of the NSW Lands and Titles registry - the fees for a number of their services were increased by up to 100%. The most transparent (well-known) fee for private residential settlements/registration was not doubled though. Just the ones not so 'electorally' sensitive.
Back to the valuations - buyers pay a price reflecting the present value of future cash flows (earnings) from the asset discounted at whatever rate of return they set as the hurdle (required) rate.
Ramping up the earnings sees the final sale price increase 16 to 20 times the amount of additional fees (if no CPI linkage added - ever heard of Transurban?). If CPI-linked then it is a much greater increase in value.
The term 'gold plating' means just that - you are not getting solid gold but a pale imitation that does not have the same attributes nor longevity as solid gold vs gold-plated. Gold plate does not wear well being around 0.003mm thick!
The spending was done, commissions earnt, 'investigative' trips made by senior Govt executives to various countries such as the UK in late June early July for example. It does not mean the spending was done on quality installations that will improve the outcome.
The reference to the SA transmission towers failing in the strong winds (near cyclonic according to the various investigations) were alleged to have not been properly maintained amid allegations that the owner had cut maintenance spending to increase their return on investment.
That is a totally different matter to building something not required.
