SELLING ETSA 16 years ago has cost the state up to $2 billion as power prices continue to rocket, according to a damning report on privatisation.

Economist John Quiggin says that since it was sold off, earnings had increased “at a real rate of two to three per cent per year”, which he had predicted in 1998, the year before it was sold.

The report, Electricity Privatisation in Australia: A Record of Failure, states: “The observed outcome supports (our) conclusion that the privatisation of ETSA has cost the SA public between $1 billion and $2 billion, and that an outcome at the upper end of this range is likely.”

Sixteen years ago, the $3.5 billion sale of ETSA was a hugely controversial and unpopular move.

MORE: Federal Treasurer eyes SA Water as part of asset sale proposal

Then-Opposition Leader Mike Rann and former Premier Don Dunstan were passionately opposed to it, and an Advertiser poll at the time showed just one in four people thought it would be a “good thing”.

But John Olsen’s Government at the time needed the money in the ongoing fallout from the State Bank collapse and said the move would protect consumer interests.

Professor Quiggin is an Australian Laureate Fellow in Economics at the University of Queensland. He told The Advertiser yesterday that not only would the $2 billion in earnings have helped the state budget, having Government-owned electricity networks would have driven down prices.

He said the starting point in bringing down prices would be to have a nationally integrated grid, whereas at the moment people were still trying to get over the “failed process” of privatisation.

“SA really is the Exhibit A in privatisation leading to higher prices,” he said.

When Prof Quiggin did the original economic modelling on the sale of ETSA in 1998, he worked with John Spoehr, who is now the executive director of the University of Adelaide’s Australian Workplace Innovation and Social Research Centre.

Associate Professor Spoehr said he always thought privatisation would hurt SA households and businesses by driving up power prices but that it was “terrible to look back and see your predictions come true”.

“It was politically expedient to reduce debt (and) that was done by getting a very profitable asset off the books and losing a stream of income that could have helped fund other services… could have been used to keep prices down,” he said.

Assoc Prof Spoehr also pointed out parallels with the current Government, which is pushing for the privatisation of public assets to fund infrastructure.

“The (Olsen Government) had an audit commission which suggested the privatisation of ETSA , the outsourcing of the management of water… and of course this is what we’re now seeing nationally with the Treasurer’s statement about $130 billion worth of (potentially saleable) assets,” he said.

The report was commissioned by the Victorian Branch of the Electrical Trades Union.