Re: I was talking to the Ukrainians about you.

["Tim Mitchell" <pentim@netspace.net.au>]

Dear All

Many thanks Don, Dan and Barry for your thoughts.

If I can indulge you, I'll briefly describe developments in electricity in
this state over the past decade.

Up until the early 90s we had one monopolistic electricity generator,
transmitter and distributor. I think it had in the order of 14GW of
generation capacity. It was called Pacific Power.

National Competition Policy was introduced by Labor Prime Minister Keating
in the early 90s. It provided grants to the states in the federation in
return for competition reforms in the public sector with payments in the
range of A$200 to 600 million per year to be paid out right up until 2006 or
thereabouts.

One of the consequences was radical reform in the power sector. The state of
Victoria under a conservative government has completely privatised its power
(around 12GW, I think). This was all by way of trade sales with many US and
UK power companies picking up the prizes.

In 1995 after passionate internal debate the Labor NSW Government
disaggregated Pacific Power. It was divided up in to 3 competing state owned
generation companies and 6 state owned distribution companies and one
monopoly transmission company. As competition means the private sector is
gradually creeping in at all levels, the pressure on the bottom line for
these state owned entities has dramatically increased. By 1/1/2001 the state
owned distribution companies will be subject to full retail contestability
ie every home owner will be able to pick and choose their supplier from one
of the six or a range of private firms.

In 1997, the Labor Government attempted to push through a A$25 bn
privatisation plan of its electricity assets. This failed dismally when the
Premier and Treasurer of NSW were shouted down on the floor of the party's
Annual Conference. Under the Party's rules the unions have 60% of the
Conference delegates. It is the supreme policy making forum of the Party.
That might sound Stalinistic to American ears but that's our Party. It is
after all in its 109th year.

I was convinced at the time that the "relationship marketing", for want of a
better expression, of the privatisation proposal was abysmal. Treasury was
driven by the global elites (read investment bankers, lawyers etc) who were
focussed on big fees. What were thousands of employees and union members
offered in the deal? The horrible fear of job loss and the reassurance that
the State's debt problem would be solved once and for all.

An ESOP/CSOP privatisation, if carefully managed and all relevant
stakeholders being invited to participate in its development should present
an opportunity that would at least entice unionists to the negotiation
table. With the bad name that "privatisation" has earned, this is half the
battle. But unionists also know when the writing is on the wall.

Recently, I have had discussions with senior union officials in this state
who represent workers in FreightCorp. It is the government owned freight
rail company, a profitable organisation because of its lucrative coal
haulage contracts.
Competition policy means that private freight rail companies are beginning
to compete with FreightCorp. Unionists know that their members do well in
those private companies and they know that without capital injections from
Treasury's Con Fund, the long term prospects for FreightCorp are bleak. I'll
forward you a draft paper I wrote that discusses some of the marketing
aspects of how the Government should go about privatising FreightCorp.

Privately, the FreightCorp unionists are interested in a Labor ESOP style
privatisation. Naturally, they will not take the lead and the Government for
the time being has gone quiet on the issue of privatisation. The
Conservative Opposition was annihilated in the state election in March this
year. Unlike Labor who promised to not privatise electricity, the
Liberal/National coalition (conservatives) promised to give every
electricity consumer in the state, A$1000 worth of shares, gratis, in a
privatised electricity entity. The idea sank like a dead duck after the
Liberal Party's leader didn't appear to know what she was talking about when
questioned about it early in the campaign.

I know I'm rambling now but a focus on communication in ESOP privatisations
is key. Hence, I was delighted to read your ideas barry for Ontario Hydro
and see you've gone to the effort of preparing a web site to canvas your
ideas.

My only comment would be to suggest you try and work something in to it
which shows a sympathy to Labor and some awareness of some of the ideas that
are evolving through the work Dan referred to and being done by places such
as the Worker Ownership Institute. Otherwise I'm afraid to say, from labor
eyes, your site may look like another clever way for a stockbroker to make
more fees. Maybe you could find someone who is sympathetic and is a
recognised labor or union figure to join your committee. Perhaps Dan would
have some suggestions.

Don't get me wrong I'm not here to push some blind labor agenda but I am
convinced that unless working people are ignited on this issue we'll still
be talking about it, in a momentum free zone, in our twilight years. Again,
communication is the challenge.

That's enough from me for now. Look forward to your thoughts. Cheers all.

Tim

I've written an article which is on the AEOA website (www.aeoa.org.au) which
elaborates on some of the above as well.



-----Original Message-----
From: Don Ward <donrward@hotmail.com>
To: EOpriv@cog.kent.edu <EOpriv@cog.kent.edu>
Date: Wednesday, 06,October, 1999 07:37
Subject: I was talking to the Ukrainians about you.


>Tim Mitchell,
>I met some Ukranain city officials the other evening. They were in
>Louisville, Ky. to learn how American cities manage public service
>departments. The subject of privitizing those services came up. I told them
>about you and your work in Australia. It seemed like I was talking to
>another planet.  They had difficulty in grasping why a government would not
>want to provide those services and provide many at no cost. WE also talked

>about Employee Ownership. I totally lost them on that.
>
>Also, I somehow got into your discussions about looking for labor union
>mqanagement models for the work you are doing in New South Wales. Actually,
>I would think that if an United States model would work, Dan Bell could
help
>you a lot.
>
>I moved from Northeast Ohio, Dan's organization is based there, in 1971. It
>was cold, businesses were failing  or moving out and everything was
rusting.
>A popular folk singer of the time even wrote a song about the river that
>flows through Cleveland, the largest city in that part of the world. The
>river(it had the native american name Cuyahoga) was always catching on
fire.
>The song went something like "burn on big river, burn on."  I got a job in
>Louisville Ky and grabbed it.
>
>About five years ago I began to meet with clients of Dan and his
>organization up in the same country I escaped from so long ago. My purpose
>was to more involve our employees ( we were a
>non union ESOP company) more in their safety. There for the first time, I
>met union officials who were stockholders in ESOP companies. Many of them
>talked more like management than the management reps, the ones with the
>white shirts and ties. Again, Dan would know more of how that paradigm
shift
>took place. If there are comparable conditions,probably saving jobs, Dan
>would know.
>
>I have two questions;
>
>You talked of democratic capitalism? How do you see them blending together?
>
>Why would the average union official want the headache of ownership? I n
>northeast Ohio it is ownership or no company, no jobs and therefore no need
>for a union. Dan would know that. In the United States aboout 1935,
>President Roosevelt got a law passed to give unions the right to organize
>workers and bargain collectively for them. The law specifically excludes
>management. As ESOPS gain more power and employees assume management
>funcions will there come a time when they can no longer have the
prot3ection
>of thart law. WE call it the  "Wagner Act". This may not be true in your
>country.
>
>Hope you get this and you will be the first to when the Ukranians do begin
>to privatize governmental functions.
>
>Good Luck
>
>Don Ward
>
>
>
>
>
>
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