QF, a question of policy.

[QFinsider]

In Australia in the last 10 years, there has been a rush of privatisations, both large and small. Governments have revelled in the extra cash. "Shareholders wealth" has increased...But in reality the "public" these goods and services were designed to serve aren't necessarily shareholders, so what in actuality is the benefit?

Instead of looking at only financial measures, a stakeholder, be they a customer, a citizen or perhaps the national interest ought be considered.

Here we are with a transport company that grew to cover the vast distances of our continent. The transport infrastructure is absolutely in the national interest. A telecommunications network is definitely in the national interest. Many say that competition policy is much more efficient if left unchecked, the market will fix it. The market doesn't.

Telstra is about to be privatised. The government says it must maintain the universal service obligation. A privatised company can do as it likes. Ultimately the areas it invests will be those of perceived commerical ROA. Same deal with Qantas. If in fact the company is a private entity the government has no role to play, QF can do what it likes, accountable only to shareholders(whoever they are-and usually short term in duration) The government influences the decisions of Qantas, yet claims it is a private entity.

The national interest IMO does not lead itself to privatised entities owning and commercially operating assets of the former commonwealth. The crap eminating from Helen Coonan about Telstra or Warren Truss on QF confirm my belief the market fails to manage properly the national interest. There is no acceptable "commercial national interest."

In these days of right wing politics, admission the market can't provide a solution that benefits the national interest in blasphemy. Very often however,the government continues to meddle in the affairs of former government assets. As with QF it has no legitimate role.

In essence my question is if the shareholder's wealth has improved, should the government intervene? Is the continued meddling an admission that the commerical relaity is the national interest is broader than the shareholder's wealth. If it is perhaps we ought consdier the stakeholder before we left Darth Dixon have his way with our icon...

Just food for thought.:E

It really is something that I think is lost in mainstream comment

[Ron & Edna Johns]

You're exactly right. Some time ago I formed the opinion that Qantas and Telstra should not be privatised. There are people who argue that you can get a better Return On Equity by winding these companies up completely and putting the money in the bank! Well, not quite, but there is rationale to that. Certainly invest the money elsewhere. Think about that - you can better return on the shareholders' money if Qantas was closed down and the cash invested elsewhere....

But is that what the country as a whole would want? The government? The electorate? The worker? The consumer? Of course not. So the concept of running such companies purely to maximise shareholder value is flawed.

As to where the balance should lie can be debated forever. One such position is that critical infrastructure, such as air transport, telecommunications, roads and sea transport, should remain firmly in the people's hands. That is not to argue that the old bureaucratic inefficiencies should be permitted, only that there is more to it than simply achieving some benchmark ROI or ROE, at seemingly any cost to the community. For "community" you can read (1) consumers, especially those in remote Aus or other commercially marginal regions; and (2) Australian workers at companies like QF and Telstra.

Ahh, but the Governments of the day don't want to be involved in running what, arguably, basic government responsibility. They'd rather divest that responsibility and the asset, getting a handy little cash injection at the same time. If only they would spend a little more time divesting themselves of the hopelessly inefficient federal-state-local tiered system of government we have for our 20 million population..... Now THAT would be real progress for the country.

[4Greens]

Another issue forgotten by press and Government alike is that QF is the fourth arm of the military. If ever the balloon goes up and people have to be moved quickly and in large numbers then only QF will be available. This affects issues such as moving heavy maintenance overseas as well as share holding issues. The average private shareholder is reluctant to see his assets flying into war zones.

[DutchRoll]

I think the Government are actually well aware of that 4Greens. There have recently been some subtle political murmurings on that very topic.

The Government would be watching the military capability side of things, as well as the fact that no sooner do they go out on a limb to protect Qf from certain competition, then the CEO starts talking of moving certain core jobs to china, etc. The fact that the Treasurer mentioned that at a recent press conference indicates our illustrious CEO is delving deeply into politically sensitive territory, and he might start losing friends in positions of power if he keeps that up.

[Lodown]

To my way of thinking privatisation is acceptable provided it is full privatisation and not some brand of Clayton's privatisation with provisions that we've had with Telstra and Qantas.

[Redstone]

I have to agree with that statement lodown, the government can't have it's cake and eat it as well, it can't decide to sell a piece of inffrastructure or privatize a company but then set complicated rules as to how it must then be run. Either they want to control and run said assets, or they don't. Government has no business being in business. That having been said, it is an entirely different debate as to which assets should/should not be retained in public ownership. As mentioned earlier, strategic assets one would assume fall into that category. It is ineresting to note the attitude of the Singapore government. By and large it feels that it should retain control and ownership, doing a fairly good job of it into the bargain. At the time the government was setting up the Telstra sale I remember thinking "why should I buy into something I already own?"

The problem is that big business (and by that I mean the globals) are lobbying like never before using their considerable leverage on governments pushing the private ownership barrow. Put quite simply they want to own everything, even the most basic of utilities.

[Lodown]

Neither do I think it is appropriate to privatise a monopoly without ensuring a mechanism for creating healthy competition. The competition benefits consumers. Privately run monopolies milk them.

[4Greens]

Neither do I think it is appropriate to privatise a monopoly without ensuring a mechanism for creating healthy competition. The competition benefits consumers. Privately run monopolies milk them.


Think Sydney airport!

[the shaman]

I don't see a problem with Qantas being privatised as such, but I do object to exec management applying business principles to it like it was a merchant bank ... there are other imperitaives attached to it other than outright profit ie. obligation to train apprentices so as to maintain a bank of skilled workers in this country, also to be able to augment / supplement our military capability in times of conflict...

Fact of the matter with regard to Heavy Maint shut down in Sydney is that state governemnets of VIC and QLD have each given Qantas tens of millions of dollars to relocate to their states respectively..

[Pass-A-Frozo]

Clearly good pilots.. not so sure about the economics behind the rumour or opinion though..
People often state on here when an ill informed opinion about flying "Yeah.. right mate, that's all it takes..."... perhaps some people around here should apply the same statement before they make statements regarding macroeconomics and public opinion. Post all you like, but maybe just think there are things you don't understand.

I quite agree with lodown:
Neither do I think it is appropriate to privatise a monopoly without ensuring a mechanism for creating healthy competition. The competition benefits consumers. Privately run monopolies milk them.

I think that should also apply to duopolies like QANTAS/VIRGIN. For example given the current arrangements, perhaps the SYD/LAX route should be regulated and capped, to prevent monopolistic/duopolistic pricing policies.

[QFinsider]

So what's missing oh public servant?

Stakeholder is a broader definition. A Shareholder is a share holder, the net increase of shareholder gains too selective to judge the merits of public policy.
The concept being investigated comes as a result of two professors(one in private employ, one public) of economics and commerce investigating the "public benefit" of privatisation...course PAF if you know more sitting in the sheltered workshop of public employment let us know. The emperical evidence suggests it isn't a positive for those of us outside the spectrum of share ownership. What would I know I'm just a pilot:E