THE Auditor-General's report on the planned sale of the NSW electricity industry is at once welcome support for the privatisation plans of the Premier, Morris Iemma, and an important test for the Opposition leader, Barry O'Farrell.

Peter Achterstraat's analysis offers no comfort to opponents of the deal, while reassuring its supporters. Mr Achterstraat finds the Government's privatisation strategy is "appropriate for maximising financial value for taxpayers". In particular, Mr Achterstraat says protection for power industry employees - the most vocal opponents of the scheme - is better than the norm, while protection for consumers is in line with that of other states. Mr Iemma has welcomed the report as a stunning endorsement of his plans.

However, the report is not uncritical, and offers constructive suggestions for improving the privatisation process. For example, it believes that electricity retailers and generators should be offered simultaneously, not sequentially as proposed. It says likely investors would want both, not just a retailer. Encouragingly, the report quotes expert advice that there is still "significant competition for investment opportunities among infrastructure investors globally". It notes that Singapore is privatising its power assets, with the first stage netting $3.2 billion, regarded as an attractive price. The report says its few concerns with the proposed privatisation can be "swiftly addressed". Of course, none of this dispassionate good sense will sway government critics in the labour movement who cannot see past their own misguided notions of self-interest. However, it should end the prevarication by the Opposition. Mr O'Farrell has been saying he could not endorse the privatisation without an auditor-general's report showing it would serve the public interest. Well, now he has it.

While power privatisation has fractured Labor, it has also divided the Coalition. The Nationals fear privatisation will cost them dearly, especially in regional seats where power is a big employer. Mr O'Farrell must now show his authority. He must put good policy ahead of populism, and demonstrate that he can take the Coalition with him. The multibillion-dollar proceeds of the power privatisation will mean a long overdue boost to infrastructure and services throughout NSW. That should not be a hard message to sell. If Mr O'Farrell is to show himself fit to lead the state, he must be prepared to put the best interests of all the people of NSW above the sectional interests of a few.

The middle way on student unions

THE Rudd Government had to do something about the decline in student services at universities, but it is not planning to turn back the clock. The Education Minister, Julia Gillard, is not contemplating a return to compulsory student unionism and mandatory fees. Instead, all students will be levied union fees - unless they opt out. Experience shows that the opt-out arrangement works. Inertia keeps membership, and fee revenue, at useful levels. It is a reasonable compromise, which deserves bipartisan political support. The last is vital: what universities and their students do not need is a controversial system that is revised with each change of government in Canberra.

Some mourn the end of compulsion - despite its faults - as the death of an ideal. It ensured enough money was available for student organisations to enrich university life with a sense of community - to elevate universities into something more than just degree factories. Unfortunately, successive changes in tertiary education have proved fatal to that ideal. If it ever was, university life is no longer one of scholarly contemplation and learning, with opportunities for enriching leisure activities in small groups; for most students at today's huge, impersonal institutions, it is now a crammed rush between lectures, assignments and part-time jobs.

Certainly those institutions still need to provide access to services, as well as sport and leisure activities, and the funds should, as far as possible, come from students themselves. General restrictions are necessary to ensure students' funds are not squandered on political activism - the most objectionable by-product of the arrangements which existed before the Howard government made student union membership voluntary. However, in other respects the students should manage where the money goes.

The Federal Government will almost certainly have to keep topping up funds for student services - as the Howard government did temporarily when its changes led to a severe decline of sports and services. However, a decision should await the report of the Bradley review of higher education. It is to be hoped it will recommend rationalisation of the 37 publicly-funded universities into a smaller number of more specialised institutions. The money saved could fund greater federal support for non-academic services and activities on campus. Our universities should offer the opportunities that make for a well-rounded education, not merely a narrow vocational qualification.