Read this little number from Hansard in 1999:
Earlier this month the Productivity Commission published a paper on privatisation by two specialists in the field: Professor Stephen King of Melbourne University and Dr Rohan Pitchford of the Australian National University. The two gentlemen effectively belled the cat on privatisation in this country—indeed, the privatisation of public assets by governments in general. These are just some of the comments made by the two academics:
Privatisation can create a new range of government bureaucracy and control that exceeds any burden under public ownership.
It is simply stated that public ownership is less efficient than private ownership. But there is little analysis of the source of this efficiency or any potential benefits that public ownership may create which could offset this inefficiency.
They also found that:
Much of the debate on privatisation involves rhetoric rather than research. When private and public sector managers have similar incentives and objectives, performance differences are less obvious.
The gentlemen said that governments were forced to intervene more regularly and introduce more regulations to control privatised public assets as competition had failed to protect consumers. They concluded in their investigation that:
If it is difficult to regulate a privatised firm and this firm can engage in undesirable practices, then public ownership, possibly with an alternative level of private sector involvement, may be preferred.
Governments in this country—both at state and federal levels and of both political persuasions—have been guilty in the past of rushing headlong into privatisation for the sake of it. Common thought had been—and still is, I might add—that public ownership was an inefficient anachronism while privatisation meant saying goodbye to suffocating government regulations and outmoded business practices and really saying hello to increased productivity and efficiency.
But, if you take a closer look, you will see the figures do not always tell the same story. As the Sydney Morning Herald's Ross Gittins wrote about the sale of Telstra recently:
Selling a profitable asset such as Telstra may reduce net debt, but it does nothing to increase the Government's net worth. And it may or may not improve the Government's future net income flow.
An article on this subject in the Australian Financial Review reached a similar conclusion:
Privatisation is not a cure for human fallibility, and . . . assumptions about the inherent superiority of the private sector are untenable.
Most ordinary Australians would find themselves agreeing with Ross Gittins and the Productivity Commission's King and Pitchford with regard to their views on privatisation. They would agree not through any academic or high-minded analysis of the economic problems associated with privatisation but by really basing their opinions on plain commonsense.
They know that, in order for some services to be delivered fairly and effectively, the government must retain chief control, if not full control, of the particular public asset. They know what can happen when public assets become the victims of ill-considered privatisation. They know because they are the ones that are often on the receiving end of poor service and higher prices when privatisation in this country goes wrong.
They know that some public assets and some government services should be considered sacrosanct when it comes to private sale. For example, while the sale of Telstra may have sent a minority of Australians racing off to find their chequebooks, the majority of Australians are still against the full sale of the telecommunications network. Most Australians want the government to retain majority ownership of this utility while there is still a chance to do so. Most Australians recognise that Telstra performs essential services for all Australians. For the foreseeable future at least it dominates massively the telecommunications industry in this country. Why shouldn't it continue to make money for all Australians? Why should it make money for just those shareholders lucky enough to have the finances or the wherewithal to invest in it?
Scratch most ordinary voters living in this country and you would find that they could tell governments exactly what they see as the problems associated with privatisation run amok. In fact, many of them have already had a go at telling governments just that. Recently we saw the electors in Tasmania and in New South Wales deliver sound drubbings to parties that had gone to the polls with policies heavily reliant on privatising dearly held public assets. The Victorian government, headed by Jeff Kennett—possibly the arch-proponent of privatisation in this country—was brought to the edge of defeat partly because of the public's antagonism towards his privatisation-gone-mad style of government. The same can be said about John Olsen in South Australia. It was primarily because of his government's decision to privatise South Australia's power supply that Labor was able to come within a whisker of retaking the treasury bench in the last state election.
People do not like governments simply selling public assets in order to raise money for their own coffers. They need to be con vinced of the necessity of such action. They need to be convinced, on a case by case basis, that privatisation is necessary and makes sound economic sense. Of course, privatisation can be beneficial; it can make economic sense. None of us could imagine living in the old days when governments owned butcher shops or even ran liquor stores. There are some areas of private enterprise where governments plainly have no business, but when it comes to public utilities such as Telstra, state and territory power supplies and Australia Post the public quite plainly want them to remain in their hands—not just the government's hands, their hands.
Australians deserve the right not to be treated like mushrooms when it comes to privatising and have governments tell them that they know what is best for their assets—because quite simply they do not. I believe and I reiterate that Telstra is a case in point. Adding weight to the argument put forward by King and Pitchford, Telstra has around five separate bodies currently involved in its regulation, the number of which is directly linked to the government's privatisation process.
Another problem with privatisation is the growing levels of secrecy that have sprung up and now surround the management of formerly transparent public assets. The Labor Party has been trying for over three years to get the Crown Casino tender documents from the Kennett government under freedom of information laws; it has been denied them at every turn. In South Australia, contracts setting out the services to be provided by Group 4 Correction Services, a private prison operator in that state, also detail a prisoner's rights. But the same contracts contain a clause that denies third parties—you and I, the public—other than the government and the private operator from seeing any of these details. How can a prisoner know of his or her rights if he or she is not allowed to see the contract that details their rights in the first place?
Governments in this country have rushed so quickly into privatising public assets that Australia has now reached a stage where it is one of the largest privatisers in the world. Indeed, in the six months to 30 June this year, Australia was the largest privatiser, with $7.5 billion worth of announced privatisations—15.4 per cent of the world's announced privatisations in that period. This arguably dubious honour came thanks to the Victorian government's sale of its gas, electricity and pipeline interests.
One of the most insightful observations about privatisation comes from the Canadian theorist and author John Ralston Saul in a recent lecture here in Australia. He said that privatisation essentially allowed:
. . . extremely lazy and not very imaginative people to get a hold of fully developed utilities which don't require any risk or imagination and they're able to sit there and basically clip their coupons as you flush your toilets.
By moving things like water out of government into the private sector you're bleeding real investment capital out of the private sector, you're rewarding laziness, and you're rewarding these managers who go about in capitalist drag.
Well said, Mr Ralston Saul. Australia's headlong rush towards privatisation betrays a lack of serious thought among our leaders about how to solve the efficiency and productivity problems that do exist within our public utilities. That is what we are elected to do—to come up with solutions to these problems, not sell off the family silver willy-nilly. I am sure most members of the public would agree with me. If some members of the House examined their consciences, they too would stand up and agree with me.
The Prime Minister's vision of a shareholder's democracy based upon the privatisation of public assets actually belittles the democratic process. As Ralston Saul said in that same lecture, leading a democratic society by economics—by self-interest—demotes the citizen and our civilisation to little more than a decoration. While there remain in this country assets still owned by the public, we need to work harder and think more clearly about privatisation before it is too late. We will soon have nothing left to sell.