Has there ever been the privatisation of a government asset that has led to a benefit for the public?
The definition of ‘benefit’ depends upon your perspective.
Modern governments declare the privatisation of public assets and services as necessary to gain an efficiency dividend – that the free market and private enterprise perform more efficiently than a government-owned entity. The sale of a government asset will either be declared a necessary injection of funds into the public coffers, or the lifting of a burden on the taxpayer – depending on the government’s ideology.
But to answer my own question using a government buzz phrase, there is never a benefit to Australian ‘working families’.
Take the example of the Commonwealth Bank. Its privatisation took place during the financial deregulation years of the Hawke/Keating government, and its sale raised $7.8 billion in 1995-96 dollars. Deregulation of the financial system aided the Commonwealth Bank to make a $5.4 billion profit in 1998-2000 (or three-quarters of the sale price in the blink of an eye, profit that went to investors rather than the public purse).
The sale also placed added burdens on us account holders, with increased fees and charges, reduced services and exploitation by the collective monopoly of the Big 4.
The same scenario plays out in the debacle that is the electricity supply industry, where investors win out over the taxpayer.
In 2015 the NSW Government sold the coal fired Vales Point Power Station on the shores of Lake Macquarie for $1 million. Gladys Berejiklian, who was then Treasurer, declared the sale would rescue the taxpayer from “ongoing losses” and exposure “to significant liabilities”. What she didn’t publicise was the $371 million valuation write-down when the closure date was ‘re-assessed’ from 2029 to 2021.
Within two years, Vales Point Power Station was valued at $730 million (aided by the closure of Hazelwood Power Station in Victoria and soaring gas prices) and investors pocketed a nice $40 million through a share buyback. The new owners now assess the useful life of Vales Point extending beyond 2029. They must be relishing coal-friendly Coalition policies and the years of windfall profits that the public has been unburdened of.
And consider the bankers and investors who are circling Macquarie Street with their eyes on the NSW Government’s remaining 49 per cent stakes in Ausgrid and Endeavour Energy.
The losers of course are the energy-consuming public. As wide scale privatisation hasn’t brought the free market benefits (lower prices and greater efficiencies) touted as the motivation for selling our assets, we have now reached the ludicrous spectacle of the Federal Government threatening to electricity providers with a Big Stick if they don’t bring their prices down. This is in direct violation of their free market ethos and is purely for show because they have suddenly realised high electricity prices are political kryptonite.
Let consider an example in the health sector.
The privately run Northern Beaches Hospital opened last year, having been built with $2.1 billion of taxpayer funds. Within days of opening, the hospital was besieged with complaints, including those of staff regarding equipment shortages, and following news the hospital was being sold to an investment company domiciled in the Caribbean tax haven of Bermuda.
Essentially, the public have funded a service that is on face value for the public benefit, but now turns out is the vehicle for not only profit making but shifting those profits offshore, thereby avoiding tax.
Any government that could not see this was going to happen, and did nothing to prevent it, is one that has abandoned the most miniscule pretext of ‘working for the people’.
How about age care, you ask? Same deal. The same ‘financial engineers’ behind the Northern Beaches Hospital offshore transfer are looking to purchase the largest Australian aged care provider. This will result in the care of thousands of elderly Australians and their carers being reduced to data on an overseas balance sheet – prioritising tax avoidance over resident care. And bear in mind these aged care facilities are subsided by government to the tune of billions of dollars, at a time when the industry is rife with accusations of the malnourishment and mistreatment of residents.
How about issuing Australian visas? Pardon? Yes, the federal government is well advanced in privatising the processing and issuing of Australian Visas (didn’t hear that in the election campaigning did we).
The need for free market efficiencies has placed this core government function at the centre of a bidding war between two rival companies battling for the visa gravy train. The bidders hold connections to the Liberal Party, the Murdoch media empire, and the Packer gambling empire. One bid is headed by the director of the Cronulla Sharks rugby league team, a friend of PM Morrison. The other bidder was the provider of the troubled MyHealth digital records system.
Privatisation of the visa system in the UK resulted in rampant cost increases and concerns about data storage and 0security. But as long as stakeholder value is preserved.
Another under-the-radar deal was the 2017 lease of the NSW land titles registry to a consortium of funds managers and pension funds for 35 years. Again, a core function of government (and a profitable and efficient one), it did not take long for the new operator to be caught price gouging the public.
Defunding TAFE and paying private vocational education providers? Skills shortage and multiply dodgy operators are the result.
Employment services? Ditto. Profit before people.
Am I raving socialist and an enemy of the free market? No. But surely the grossly self-seeking policies of successive governments in seeking to privatise essential services is in violation of the trust the voters have placed in them.
By his own admission, Greg Smart was born 40 years old and is in training to be a cranky old man. He spends his time avoiding commercial television and bad coffee.