Is privatisation next in Labor’s tattered playbook?
Even after 30 years, voters loathe privatisation. That may prove a potent weapon for Labor if it is prepared to dump its history on the issue.
As some of us suggested last week, the Prime Minister’s sojourn in western Sydney and her focus on foreign workers and gun crime appears to have delivered some short-term respite for the government.
But the Prime Minister’s difficulty is she needs to keep creating circuit-breakers and knocking the political conversation off-course and onto what she wants to talk about. So what next?
Well, the issue of privatisation remains a potentially potent one for a beleaguered federal government.
Polling yesterday from Essential Research again confirmed the depth of public animosity toward privatisation, with 58% of voters believing privatisation is a bad idea. And while Liberal voters were most likely to support privatisation and Greens the least, in practice there was little difference: 54% of Liberal voters think privatisation is a bad idea compared to 70% of Greens voters. There are few economic issues where there is so little difference between voters of different parties.
And support for privatisation is particularly, and unsurprisingly, low in Queensland, where just 15% of voters think it’s a good idea.
In late 2011, Essential asked voters how they felt about the big economic reforms of the last 30 years, and whether they wanted to reverse any. The responses suggested there were three kinds of reforms: those that the public enthusiastically supported (compulsory superannuation and Medicare), ones they had mixed views on, but by and large supported (the GST, floating the dollar, free trade agreements) and ones they think were bad — the privatisation of Telstra, Qantas and the Commonwealth Bank.
In fact such was the antipathy to those privatisations that there was net support for buying back all three — the only major reforms voters wanted to reverse. Even the once-loathed GST, after more than a decade, has embedded itself in the national psyche. But not privatisation. It’s the economic reform that has never stuck with the electorate.
The basis for the dislike of privatisation is simple: voters don’t think there are any benefits to themselves or even to governments — they think most of the benefits flow to private companies.
At best, this is a huge failure by both the political class and the private owners of major assets like Qantas and Telstra. Privatisations are ostensibly for the benefit of voters, who obtain better services provided more efficiently by the private sector, and indirectly via greater economic efficiency. Voters, however, tend only to see Qantas systematically debauching its services and trashing its brand, or Telstra behaving like a profit-obsessed monopolist rather than just an engineering-obsessed monopolist, or the Commonwealth Bank gouging its customers.
The issue should thus be a fruitful one for Labor to exploit. The federal Coalition remains committed to the sale of Medibank Private (an eminently sensible policy) and the Queensland government has just unveiled a health policy focused on outsourcing and privatising health services, even before Peter Costello’s Commission of Audit spruiked selling everything else north of the border.
Labor’s problem, of course, is its own long history of privatisation. Qantas and the Commonwealth Bank were its privatisations. Its current policy is to eventually privatise the NBN. The NSW party tore itself apart over electricity privatisations. The Bligh government boldly embraced privatisation to shore up its financial position, and was punished with an historic loss. Bligh’s adoption of privatisation remains a sore point within the federal party, where it was regarded as both damaging to Labor’s brand and electorally suicidal.
As with its campaign on 457 visas, a Labor campaign on privatisation would be a partial repudiation of its commitment to an open market economy, although it could rhetorically distinguish between privatisating core infrastructure and outsourcing traditional government services. But this is a government very much in short-term mode at the moment.
‘Even after’ is, I think, the wrong construction. It might be better framed as ‘having experienced the results of privatisation over thirty years’ people are not impressed.
As for ‘outsourcing’, let’s start with various IT train-wrecks (cost or performance, which failure is worse?) across the jurisdictions. Or maybe transport ticketing systems …
Bernard, repudiation of privatisation is not opposition to an open market economy. It is repudiation of the neo-liberal agenda, which has fastened ideologically on the welfare theorms of neo-classical economics. This ideology urges not only open markets where they work well, as with the more or less competitive markets for electronic goods, computers, cars etc, but pathetically tries to extend markets and an ideology of capitalist management into areas where markets are not very competitive and do not work very well.
This farce is played out, with encouragement from the federal bureaucracy, in universities, which get no advantage from being run as though they are businesses, with grossly overpaid executives and top down management directed by people who do not really know what they are managing.This is not to deny that some institutions, such as the Post Office, can operate well along business lines.
The same applies to privatisation. Replacement of a government monopoly with a private monopoly has only one effect: customers tend to get gouged with higher prices and employees tend to have their wages and conditions beaten down. So the public is quite right about privatisation being simply for the benefit of private investors.
This is not so say that privatisation never works. Private competitive tendering to operate facilities can work but its main effect is again to lower wages and conditions of employees and to diminish public control of the facility, since the operators are only bound by contract conditions.
So, the Queensland public has got it largely right. Privatisation is usually a hand out to private interests at public expense.
The NBN network need never be privatised. That the ALP plans to do this is a sign that they are captive to neo-liberal ideology, which Latham recently bowed to, no doubt to let Murdoch know that he might be an acceptable future Labor leader, who will never need to be hounded out of office by that loss making propaganda rag, the Australian, and its offshoot, the Daily Telegraph.
The sad thing is that the necessary spending to keep Australia out of recession after the GFC is now viewed by many as the Australian set out to show it by never mentioning any of its successes and beating up any shortcomings (when governments act, they must be 100% successful, which is a much higher standard than private businesses set). Even the worst managed of the programs, to employ unskilled workers to put insulation in roofs, has shown down the track benefits, as the fall in demand for electricity has shown.
So, yes, repudiation of privatisation might be a good idea for Labor, but they too seem to be in the grip of neo-liberal ideology, and so might not take this opportunity, even if it would improve their chances in the election, if only neo-liberal ideologists like Murdoch don’t attack them for all they worth. After all, the barrage at the beginning of the year did put a dent in the ALP vote and we can expect the same when the election looms. Crises, chaos, incompetence will all be beat up for all they are worth.
Holden Back, I agree. Perhaps Crikey could writean article eplaining exactly where privatisation has ever improved services for voters. Increased competition (in telecommunications) is one matter but Quantas,CBA, and electricity privatisation its hard to see any compelling benefit to privatisation
Is there such a thing as a privatised service that is more efficient and cheaper than the government owned service. At best they’re just as bad.
When we privatised the commonwealth bank we lost the only “honest broker” in the field and frankly, at least the engineering obsessed Telecom left us some very high quality infrastructure not to mention all the technical staff that Telecom used to train.
Jim
Has the I.P.A. taken over Bernard Keane? As I stare at my now tripled power bill since the freedom and joy of privatisation of our power supply I will never be convinced of the benefits of selling the farm forever to pay down short term debt.
The private sector is not the answer.
Beats me how people are anti-privatisation yet support the Coalition who would go for broke. A productive media campaign here, anyone?
“Privatisations are ostensibly for the benefit of voters, who obtain better services provided more efficiently by the private sector, and indirectly via greater economic efficiency”
Disagree. The free market delivers the most mediocre product at the high price the market will bear. Privatisation is constantly spruiked by egghead as inefficient, as if voters cannot read a balance sheet.
Yes it costs more to have basic services run for the public good.
Yes I am OK with that.
“Privatisation means never having to take the heat for price rises!”?
The problem the governments of both sides have is that in spite of its unpopularity, privatisation of government business is good policy. That’s why they are both doing it in the face of entrenched public opposition.
Those of you who oppose governments selling off assets weren’t alive in the 70’s or were under a rock. A key element in the reform agenda of the Hawke and Keating governments was to redress the profligate waste and poor management practices of publicly owned businesses. Hey maybe 1980 was nirvana but that’s not how I remember it.
Privatisation is a tool used by governments to introduce more commercial practices into businesses, particularly workplace relations. If it can’t be privatised, a government business will outsource the maximum amount of its support services it possibly can because it’s such a good thing to do.
It is this inability of government employed managers to be flexible and innovative regarding developing the business that makes privatisation so attractive.
There are clearly problems with privatised monolopies, such as Sydney airport which requires much more interventionist regulation than it gets. For those of you complaining about the privatisation on your power prices, you’re not living in NSW, where the motivated and service focused publicly owned power companies still supply you.
I think the Hawke Keating governments were the most visionary in a century and are unlikely to be equalled for another century. They did what was needed, not what was popular.
And another thing,
Maybe Ian Hunt can explaing what the term “neo-liberal” means and how it differs from the term “liberal. Likewise “neo-conservative” versus “conservative”. Apart from being clearly perjorative, no one really knows what they mean.
I reckon it’s a convenient way to describe economic themes that are timeless, such assurviving in business by making a profit, or supplying customer service, or being innovative, as a new, evil phenomenon.
And another thing,
Maybe Ian Hunt can explain what the term “neo-l iberal” means and how it differs from the term “l iberal. L ikewise “neo-conservative” versus “conservative”. Apart from being clearl y perjor ative, no one reall y knows what they mean.
I reckon it’s a convenient way to describe economic themes that are timeless, such as surviving in business by making a profit, or suppl ying customer service, or being innovative, as a new, ev il phenomenon.
Good comment Hunt Ian. David, slightly different way of looking at things, yes there were inefficiencies in the seventies but none of them were fixed by Hawke /Keating selling off the farm. That was the cowards way out, what they should have done was to train the public bodies to operate more efficiently, after all I have worked for some very inefficient private corporations and the most efficient organisation I ever worked for (apart from my own) was the department of Social security in the early nineties, why, because it was performance driven and well managed. Australian management practices have never been too good, whether public or private, but many many public servants took their duty to husband the nations resources to the best of their abilities very seriously before they were peremptorily sacked!
If I want to read neo-liberal platitudes I can buy the Australian or the Financial Review. I pay for Crikey to read an alternative analysis. The ideology driving privatisation, increasing social inequality, deregulation etc. is what resulted in the GFC. If Crikey does not want to become a propoganda sheet for big business interests, it’s time to replace Bernard with someone who understands economics.
On a digression from the actual topic, this is an interesting example of how polling data can be interpreted to suit the reader. 54% of Liberal voters don’t like privatisations compared to 70% of Greens voters, interpreted as there being little difference. However, on the other hand, 46% of Liberal voters and 30% of Greens voters presumably support them. This means that Liberal voters are 50% more likely to be in support of privatisation. Just depends on the conclusion you want to draw.
Ok Michael,
If we accept your point, that government organisation can be made more productive and remain in public hands, negating the point I am making, why do you think governments of all persuasions are hell bent on selling off state owned assets in the face of entrenched public opposition?
The only other explanation that springs to mind is that they are finding money to fund their ever burgeoning social welfare agendas and “kicking the can down the road” over the question about how to fund them. Is it possible that alienation of an electorate by selling off a state-owned industry loses less political capital than say, not funding the NDIS, or stopping maternity leave payments to well off mothers?
What you think is driving them?
“who obtain better services provided more efficiently by the private sector” just saying this doesn’t begin to make it true Bernard and juxtaposing this comment with examples like Telstra and QANTAS is at least mischievous, isn’t it? There’s evidence that the private sector does things for less cost but that doesn’t make the service ‘better’ or more efficient - just cheaper.
Of course we then move to the lib idea that anything and everything will work better and more efficiently because it’s run by the privates sector Which is not only arrant nonsense but heartless.
And this sentence “The basis for the dislike of privatisation is simple” should probably read - “the analysis of basis for the dislike of privatisation is simple…”
Voters are not as dumb as you suggest.
David Hand it seems does not know the difference between “liberal” which is a term for a worthy political tradition that argues for minimal interference with individual freedom from “neo-liberal” which is the term for an ideology that radically promotes private property interests by proposing the conversion of all areas of an economy into private property dominated markets, regardless of whether this best preserves the traditional values in the area. “Conservative” is the word for a political tradition that tries to preserve traditional values (so conservatives can rightly object to neo-liberal policies), while “neo-conservative” is a radical ideology that is prepared to overturn traditional vales that conflict with private property interests but wants to maintain a veneer of cultural conservatism.The reason why both “neo-liberal” and “neo-conservative” are now used so often is that the last thirty years have seen the rise of a radical ideology supporting private property interests.
The reason governments are hell bent on selling of state assets to favour private property interests is the power these interests have in the media in defining the political agenda. Economies can work perfectly well with higher levels of taxation, and these would enable funding of important infrastructure and public education and health, however, to support higher taxes would defy the silly belief that an abstract unrealisable economic model in neo-classical economics is the model for a maximally efficient economy, since it assumes that ideally taxes should be zero. sill stuff. But it has been grasped as an idea that can be sold to journalists who like to think they have a smattering of knowledge to sing the praises of policies that favour private property interests (overlooking the fact that the abstract neo-classical economic model does not explicitly demand a private property economy and especially does not demand one within the wide gulf in income and wealth that are a feature of capitalist economies)
Telstra: $50.24 billion
Australian airports: $8.5 billion
Commonwealth Bank: $5.15 billion received
Reserve Bank gold assets: 167 tonnes sold for $2.4 billion,
National Rail Corporation and Freightcorp: $1.05 bn received,
Broadcast Australia: $650 million received,
DASFLEET: $407 million in 1997,
Telecommunications spectrum: about $1.3 billion received,
Radio licence spectrum: about $1 billion received,
Property portfolio 59 sites: for $1 billion,
Total value from sales: $71.7 billion
How much better off would we be over the years if we had the income from these privatised services?
Achmed,
We would be worse off.
This is bacause all those entities would not be anywhere near as profitable under public ownership. Some may even make a loss.
You need to add the company tax all those profitable privatised businesses pay to the government as well as the revenue from their sale.
If you doubt me, just look at the NBN. Armadale? Armadale??? Do you really think a commercially focused business rolling our fibre optics would start in rural Tasmania and then go to Armadale?? Oh that’s right! Armadale is in Tony Windsor’s electorate!!
Your view is typical of the socialist end of the spectrum. You fail to appreciate how truly badly governments run businesses.
Ian, the concept of private ownership of property wasn’t invented by a neo-liberal and a neo-conservative drinking too much tequila in Washington in 1981. Private ownership of property is a foundation of western civilisation.
Russia, the other ex-Soviet states and China have all embraced such a radical concept as private ownership of property in the past 30 years. In China, economic liberalisation, dare I say, neo-liberalisation of the economy has lifted over 250 million people out of poverty in the past 30 years. I don’t know how they do it in Cuba but I do know your favoured model still operates in North Korea.
Wow, nuanced understanding of the mixed marketplace - which actually operates in most democracies - by David Hand.
Hunt Ian,
I couldn’t agree more with your analysis of the whole problem of privatization and the ideological reasons for both Liberal and Labor embracing the idea with open arms.
The wholesale privatization and outsourcing of inherent monopolies, strategic assets and community services has throughout the world been,in my view, a disaster that has played a major role in the corporate takeover of our governments by gigantic monopolies or near monopolies.
Governments have been, and continue to be hollowed out by selling off real assets to the private sector and somehow squandering the proceeds.
Runaway privatization of community held assets has also contributed greatly to rising inequality which in turn has had an extremely dysfunctional affect on societies. I recommend everyone read the well researched and well written book, The Spirit Level by Wilkinson And Pickett that examines the effects of inequality in and within developed countries.
My two comments await moderation.
Please, David Hand, why would I favour the state feudalism found in North Korea, with its hereditary monarchy, when I don’t even favour the much less noxious, relatively powerless version found in the UK? Well I never, why didn’t it occur to me that private property has been around from centuries? I am so grateful for this useful bit of information. Come to think of it, public property has been around, possibly for an even longer time. Murder has also been around for a long time but I would not take that as a reason to embrace Islamic fundamentalism, or think any ideology reasonable when it says that taking innocent lives will give you a place in heaven. (This is not an objection to Islam). Similarly, an ideology that promotes private property interests at the expense of the interests of the majority in society is not one I would embrace. Nor would I be silly enough to think that private property has been the foundation of Western Civilisation. Many other things have played their role, not the least being science and liberal philosophy (the “Liberal Party” has opportunistically borrowed the word). Capitalism has driven the last few hundred years of Western Civilisation but this has not been something we should applaud just for that reason, leading as it has to two World Wars and two periods of depression, with Australia escaping the latest one because of good government policy (and I do not medan the Howard government’s policy). It has produced the industrial revolution also, so it is not a period we should condemn, either.
David Hand, it doesn’t matter what you call it - neo-liberal, neo-conservative or whatever; the privatization, militarization, downsizing of government (apart from the military) and the gnawing away of the welfare systems throughout the West has ravaged the planet and brought much of the West to its knees. I see no way out and certainly more of the same ain’t going to do it.
Australia, while as Ian Hunt has pointed out, may have been better managed than the other countries is by no means out of the woods. It is a fragile economy with little economic diversification busily digging up and flogging its resources at an ever increasing rate. It is not even putting much of the proceeds of its resource sales aside for the future. Short term thinkers are what we are and the wholesale privatization of public assets is symptomatic of that thinking.
David - they were as if they were private companies with Govt as the shareholder. They paid compnay tax and then paid a dividend to Govt
Thanks for making that crystal clear Ian.
I knew from the start you are opposed to western civilisation in general and are dressing it up in meaningless nuveau-words such as “neo-conservatism” and “neo-liberalism”.
Most of us quite like it here. That’s why we vote for it.
Lets stick to the facts shall we David.
David Hand, a word from Fawlty Towers, “que?”