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For both sides, it was a game of high stakes. State Treasurer Michael Costa’s speech at the state Labor conference, which steadily built to a hysterical crescendo, provided the most memorable image of an extraordinary weekend ‘ one in which the tensions over the future of NSW’s electricity industry were on wincingly raw display. Culminating in a second, decisive vote against privatisation, the conference was widely regarded as a humiliating repudiation of Premier Morris Iemma, and in particular, the man most closely associated with the proposal, Costa. 

Yet a couple of days later, it was all smiles, with Iemma emerging from Caucus unscathed.  Although it was by all accounts a vigorous discussion, the Premier faced the press having attained what he wanted ‘ no motion for a further vote on privatisation. It was a crucial victory, for at stake over the week was the personal credibility of Iemma, the future of his Treasurer, the issue of union influence in the ALP, and not least, the nature and import of motions at conference. 

Although Iemma has pledged further talks and consultation with unions, the significance of Tuesday’s Caucus meeting should not be underestimated. Asked about the likely ultimate outcome, a source affiliated with the party’s Left faction said that despite the very public refutation at the state conference, the week had ultimately marked a clear victory for proponents of privatisation. ‘Although Iemma has promised ‘consultation’ with the unions, it means little.  The reality is that this is a decisive victory [for those in favour of privatisation].’ 

The proposal has the support of former NSW premiers Bob Carr, Neville Wran and Barrie Unsworth, as well as former Prime Minister Paul Keating who launched a withering attack on union opposition in an op-ed piece in the Sydney Morning Herald. 

For their part, unions still hope for a joint-venture proposal, variants of which they have put forward for months.  ALP state president Bernie Riordan said unions had listed up to eight options, all of which had been rejected by the Government. Some are still optimistic a deal can be reached, with the Government expected to consider joint ventures that would keep a proportion of some power stations in public hands. 

But Costa remains the fulcrum for any agreement. His uncompromising position in favour of privatisation at the conference is in line with his firm belief in economic rationalism.  His behaviour, described by one Government source as ‘jumping in over the top unilaterally’ on a number of occasions when the unions and Government were on the cusp of a deal, is widely regarded as making his position untenable in the wake of any compromise deal. 

The sparks may have stopped flying, but the stakes are as high as ever.