CPA - The Guardian

Across Australia state governments are selling off important public assets. In Western Australia the government is considering privatising a number of assets, which will probably include the port authorities, the state Lotteries Commission and the state betting agency. The government also wants to increase the use of private-public partnerships in state hospitals, schools and prisons.

The New South Wales government wants to sell off NSW Lotteries, the electricity sales and marketing organisations, Waste Services NSW, and the state’s superannuation organisation, Pillar Administration.

Unions have warned the government that they will resist the privatisation of Sydney Ferries in the same way as they resisted, and defeated, the sale of the state’s electricity generators last year, which eventually led to resignation of the former premier, Morris Iemma.

But the biggest sale of public assets is in Queensland. If implemented, this will result in a massive takeover of the state’s public services by the private sector.

As Andrew Detmar, state secretary of the Australian Manufacturing Workers’ Union commented, it will leave companies like Rio Tinto and BHP Billiton in charge of regional economies “from the pit to the port”.

The Queensland shock

Last week Queensland Premier Anna Bligh announced that the Brisbane Port Authority, the Queensland lotteries and betting agency, the state’s coal rail freight services, the Abbot Point coal terminal, Forest Plantations Queensland, and Queensland Motorways, are all to be sold. The state’s fuel subsidy will also be scrapped.

Premier Bligh admitted that there had been cases where privatisation had failed, but claimed that there had also been many success stories. Unfortunately, she chose Qantas as a good example, despite its recent poor economic and safety performance, job cuts and the outsourcing of maintenance overseas.

She also ignored the importance of the state’s ports, motorways and timber plantations, and trivialised the sell-off, noting that the state once owned a string of shops to sell meat and fish.

In an exquisite display of rationalisation, Rachel Nolan, Queensland Minister for Transport, has denied that she deceived the electorate three weeks ago, when she stated there would be no privatisation of the state’s rail network. She declared that her statement was true at the time, and that’s what mattered. “I have given you a specific answer, with a specific timeline, which specifically refutes … the notion that I mislead this parliament,” she stated with satisfaction.

Unions and other organisations have protested furiously. The ACTU says that privatisation of state assets is short-sighted, and that rail privatisation in particular has always resulted in failure.

The Queensland Council of Unions has stated:

“The QCU rejects, as a matter of principle, the sell-off of public assets. Public services are operated primarily in the interests of the people of Queensland rather than in the interests of the shareholders’ returns.

“The executive notes that the history of privatisation has resulted in the abrogation of responsibility by governments to provide vital services and long-term income streams to support these public services into the future.”

The Council has also noted that the sale of Vicrail in Victoria led to higher costs, (while the operator still receives a handsome payment from the Victorian government), the sale of the Commonwealth Bank led to the public losing record profits and the imposition of record fees for customers, and the sale of Telstra led to a loss of profits for the public and a fall in standards of service.

On the other hand, big business is delighted. The Australian Industry Group says that the privatisation initiatives will shore up Queensland’s position with the “investment community”. However, in the same breath their representative demanded financial relief from the removal of the fuel subsidy by way of a two-year reduction in payroll tax and vehicle registration, equal to the anticipated cost of the loss of fuel subsidy, “to ensure that industry doesn’t suffer an increase in its cost base at a time when it can least afford it,” as he put it.

Not to be outdone in terms of greed and ingratitude, the Queensland Resources Council has recommended that the money derived from the sale of state assets should be used to invest in more state infrastructure for the benefit of the coal-mining industry. “I’m thinking here of areas such as the north-west of the state which has struggled for a number of years with the adequacy of energy and transport infrastructure”, he declared earnestly.

Where’s the fire?

State premiers have maintained that the asset sales are necessary because the world economic crisis has reduced Australian government income. But that’s a poor excuse. In fact, the beneficiaries of the asset sales will be the purchasers, because most of the sales involve extremely important government services, for which there will always be a strong demand, and because during a depression prices for such facilities fall to rock bottom. It’s the worst time for government to sell, but the very best for purchasers.

As Curtin University Professor of Economics Peter Kenyon commented:

“The government should be looking at … economic efficiency. And economic efficiency would say that what we need here is a pretty careful cost-benefit analysis about in which hands would we get the most efficient outcome. Is it in the public sector’s hands, or in the private sector’s hands?

“Now that’s a very different type of analysis that is required than (whether) we need a boost to Treasury finance now because we’re short of cash. That’s not really an argument for privatisation – it’s the worst possible case, in fact, for privatisation.”

The real solution to the privatisation epidemic was demonstrated in the defeat of the attempted sell-off of the Snowy-Hydro authority and the NSW electricity generators, by the combined opposition of the union movement and concerned community organisations. That’s surely the way to go.

Next article — Green light for first ambo strike in 36 years

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