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For sale? Tony Abbott’s potential privatisation hit list

The Abbott government wants to sell off government corporations. Here’s a list of 11 targets that might be ripe for privatisation. Will it be Australia Post, the ABC, the railways — or none of the above?

There’s sometimes a very good case for corporations to be in government hands. But does Treasurer Joe Hockey really need to offer pet insurance?

The Coalition government wants to enter into another round of privatisations to reduce public debt and has set up a fast-tracked Commission of Audit to tell it what to sell. So far, Prime Minister Tony Abbott has only said he’ll sell Medibank Private (which does indeed offer pet insurance). That’s likely to change when the commission — which has a very broad mandate — hands down its findings in March.

Crikey has drawn up a list of the government-owned corporations and services that could be put forward for privatisation. It’s striking how much has already been sold off and how little is left — gone are the days when the feds owned an airline, a bank, airports, pipelines and a shipping line.

About 50 Commonwealth assets have been sold since 1987, the lion’s share around 1995-1999. This is what’s left (most, but not all, are government business enterprises, or GBEs). The government will be looking at whether there’s a case to retain each corporation in public hands, what dividend it pays, whether there would be a buyer, what price it might fetch, and how much of a stink the public would kick up …

Medibank Private. The health insurance giant is the most likely candidate for privatisation; that’s been Coalition policy for some time, and a scoping study is underway. Set up by the federal government in 1976 to keep a lid on the cost of private health insurance, it’s now the largest health insurer, with 29% of the market (just over 3.8 million people). Medibank insures pets, travel and your life, but health is the big one.

Medibank is fully owned by the Commonwealth, is a sound business proposition, and is a nice little earner. Last financial year it paid a dividend of $150 million to the feds. Medibank told Crikey the dividend averaged $325 million per annum over the last three years (page 33 of the annual report has details). Revenue has been steadily rising to $5.86 billion last year (there’s a flip side — significant increases in the amount paid out to members). Post-tax profit was $232 million.

So what would Medibank fetch? The Howard government suggested more than $4 billion, and it’s believed the Labor government got a secret valuation of $3.5-5 billion in 2011. PricewaterhouseCoopers has won a Commonwealth tender to evaluate its price afresh. The most likely purchasers would be other health funds, possibly from overseas.

Finance Minister Mathias Cormann said last month there was no public interest reason for keeping Medibank in government hands:

It is a business that operates in a highly competitive, commercial market where they’re competing with 34 health funds overall. There is no good reason on why the Commonwealth should continue to be involved in that business.”

But opponents of a sale argue that the existence of such a large market player backed by the government may have a dampening effect on the industry’s premiums (already rising steeply). Premium rises are regulated by the government.

Australia Post. This is trickier. There’s no money in delivering letters these days, but parts of the business are booming — CEO Ahmed Fahour’s salary for a start, but also parcels, retail and logistics (freight, etc). The Coalition has no mandate to sell AP, and regional communities would fight it because their (unprofitable) mail services would probably suffer. There are mixed messages from the Coalition; the official line is it’s waiting to see what the Commission of Audit says, but frontbenchers Malcolm Turnbull and Warren Truss recently said there were no plans to sell AP. The UK government recently sold off some of its Royal Mail.

Australia Post is a successful GBE with after-tax profit of $312 million last year. This shows how much non-mail services are bailing out letter delivery (which lost $218 million). AP paid a nice dividend of $244 million to the feds last year (the biggest dividend of any GBE). Competitors like Toll and FedEx could be tempted to buy the parcel and logistics sections.

Should AP be sold off, who would deliver those bank statements to the bush on the cheap at a significant loss? The government might have to retain that service, or pay new owners to do it, or force them to. Or, controversially, scrap that much-cherished service.

NBN Co. Hold on — the National Broadband Network isn’t even built yet. But NBN Co, which is charged with designing, building and operating the National Broadband Network, is a textbook case for privatisation: the government intervenes in a market to build major new infrastructure, then sells it off (see Qantas, Telstra, etc). It’s official government policy to sell it, but not for some time. Telstra might like to buy it, but would the telco pay the right price?

ABC and SBS. The Institute of Public Affairs has called for it, state Liberal parties have considered it, and GetUp is in a lather about it, but the Coalition has hosed down talk of selling off all or part of Aunty. Last May Abbott said “we won’t go down the path”.

The ABC costs the government a fair bit, and it’s hard to see how much of what it does could turn a profit. Saul Eslake, chief economist at the Bank of America Merrill Lynch Australia, said the case to sell was not strong because “it’s doing things that are legitimately the business of government, and would probably not be done if the ABC wasn’t doing them”. Eslake told Crikey it might be feasible to sell off sections like merchandising.

However, with the conservatives in the ascendancy and some Coalition figures on the warpath against the ABC’s perceived Left bias, this is one to watch.

SBS is in some ways more commercial than the ABC because it carries advertising. There have been suggestions the SBS could be sold or merged into the ABC.

Australian Rail Track Corporation. This runs much (but not all) of the interstate train network, which it variously owns and leases. It ferries coal through the Hunter Valley. The ARTC was set up by governments in the ’90s as a “one-stop shop” for rail operators. The Commonwealth owns the ARTC’s shares but received no dividend last year after the corporation posted an after-tax loss of $202 million.

Eslake told Crikey he had an “open mind” on privatising the ARTC and asked whether the government needed to run railways — but said there might be no buyer. Chris Aulich, professor of public administration at the University of Canberra, warned Margaret Thatcher’s privatisation of the UK railways did not work.

Defence Housing Australia. Has slipped under the radar, but one to watch. DHA is a GBE that provides pretty good housing to Defence Force members and their families. It buys land and builds homes, and buys and leases existing homes (and flogs some off). DHA housed 16,000 families last year and funnelled rent assistance to 14,500 people in the private market. Net profit after tax was $85 million, and the dividend to the feds was $50 million.

There are plenty of other organisations around that can do that,” Eslake said of DHA — but Aulich said there had long been a “hands-off” approach to Defence (apart from some materiel work). “It’s possible, but I would be surprised,” he said of privatising DHA.

Airservices Australia. Airservices Australia has 4000 staff who manage air traffic operations around the country, provide aeronautical data and run aviation rescues and firefighting. So you certainly don’t want a cowboy buying them out.

The feds have sold off Qantas and airports, so there is a precedent for privatisation in aviation. But Eslake told Crikey there might a public-interest case for retaining Airservices in public hands.

Snowy Hydro. It’s hidden on the website and the annual report, but yes, the Commonwealth owns 13% of Snowy Hydro (the Victorian and New South Wales governments own the rest). Snowy Hydro owns various dams and power stations and is a poster child for renewable energy (as well as for bold nation-building infrastructure). Net profit after tax was $280 million last year. It’s not technically a GBE.

There was a serious but failed push to sell off the Snowy in 2006. The Australian reports former Victorian premier Steve Bracks recently called for the Snowy to be privatised, but quoted unnamed government sources saying it’s not going to happen. The Snowy is used for irrigation and recreation as well as electricity, which means more people opposed to a sale.

The ASC. This used to be called the Australian Submarine Corporation. Now it’s not, but it’s still the prime contractor delivering and maintaining those highly expensive Collins Class submarines (it builds warships too). The ASC is wholly owned by the government and paid a rather feeble dividend of $9 million last year. Those at Adelaide HQ, watch out — the government has hired consultants to estimate the ASC’s value.

HECS debt. The government has floated the prospect of selling off the massive HECS debt  — about $26 billion — to private investors. Economic hardheads say it’s just a parcel of debt that could be sold, and Britain has done something similar. But the ALP has promised to fight such a move, warning ex-students would pay more. HECS is already a form of privatisation in that students pay for some of their education.

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  • 1
    Philip Bond
    Posted Monday, 13 January 2014 at 1:24 pm | Permalink

    I agree with most, (not the ABC/SBS) the NBN was always going to be privatised and as Kerry Packer had his Alan Bond, Telstra will have their NBN. The remainder can and will be sold.

  • 2
    David Hand
    Posted Monday, 13 January 2014 at 1:56 pm | Permalink

    Australia Post should be sold as soon as possible, as an entire business to protect the taxpayer from the collapse of latters revenue.

    I realise those in the bush will complain that they might have to pay to get their bank statements delivered but they might also want to find out a bit more about that interwebby thingy that is perfectly capable, even at pre-NBN speeds of delivering such a service.

    After all, the internet is the main reason why letters are in long term decline and parcels are in long term growth.

    Privatising the NBN will be smart as well. It will finally stop roll outs in obscure uneconomic towns with 7 subscribers that happen to be in marginal electorates.

  • 3
    Jimmyhaz
    Posted Monday, 13 January 2014 at 3:32 pm | Permalink

    The government exists to increase the quality of life for all member of its electorate, not just those who can afford it. The private sector is something the government allows to exist for this end, and if it cannot provide essential services at an affordable price for everyone, or provide these services to everyone at an equal price, then the government must step in.

    Privatisation of the NBN and AP is fundamentally wrong, this would see the lions share of funding and infrastructure go to those areas that will turn the greatest profit, while those areas that would never turn a profit (such as everywhere outside major cities) would never see anything. Internet and mail are essential services, and the government must provide them to everywhere, regardless of how much meaningless debt this would rack up.

    Even though this government believes in bunk economics, I don’t understand how privatising HECS will reduce debt at all, does it not count as an asset on the budget sheet every year? The only benefit I can see coming from privatisation of HECS is to the lucky few ultra-wealthy that purchase the lion’s share of it.

    Medibank private is something that should stay within the public hands as well, as it is the only thing currently providing downward pressure upon the prices within the health insurance market. We have a perfect case study of an essential market in which there is no downward forces acting upon prices in our nation’s electrical grids, and taking this into account, I would argue that there is significant public interest in keeping this publicly owned.

    Also, don’t privatise the ABC or the SBS, if only to annoy Rupert.

  • 4
    MJPC
    Posted Monday, 13 January 2014 at 3:57 pm | Permalink

    I just cannot understand the voodoo economics of the taxpayer funding the creation of an public infrastructure (such as AP) which turns a profit in the parcels area (and in turn subsidises the LCOA- letters delivery)then it is good economics to flog it off (and it will only be the parcels area, leaving rhe Govt with the libility for losses in the LCOA side) so the Govt ends up with a loss making enterprise and a relatively small amount which, it is the Libs, will be blown on payments to the big end of town for having time off to have babies (or, in the case of the Howard Govt-the baby bonus).
    If an entity if making a profit, don’t sell it-look to the long term viability/ profits not short term, momentary gain; revolution now!

  • 5
    David Hand
    Posted Monday, 13 January 2014 at 4:17 pm | Permalink

    The main reason why it’s good to sell these assets is that the bottomless pocket of the taxpayer enables weak managers to make poor commercial decisions with no negative consequences. It is most likely that taxpayers will get more out of a privatised Australia Post in tax on profits than they would ever get as dividends from a bunch of public sector managers.

    The possibility of going out of business focuses the mind and drives much better decisions for the enterprise and its customers.

    It also protects an organisation like the NBN being forced by Senator Conroy to roll out fibre in Armidale as a bribe in exchange for Tony Windsor’s vote in the hung parliament.

    The main objection to privatisation that has merit is the natural monopolies that many government trading entities are. The absence of a market and genuine competition would require a heavy regulatory regime that would make innovation and flexibility hard. The NBN falls into this category, though notions of fairness to the bush simply expose the whole Conroy fiasco as the socialist experiment most of us believed it to be.

    If the NBN is the vital enabling infrastructure that will drive Australia’s economy in the future it is brain-dead to start in Armidale, Kiama and a few villages in rural Tasmania. Adam Bandt’s electorate in Melbourne makes more economic sense though we all know why he got it first.

    The first railways were built by private enterprise between Liverpool and Manchester and New York and Baltimore. They were not built between Alice Springs and Adelaide because politicians at the time though it fair that Alice residents should have better access to the beach.

  • 6
    drmick
    Posted Monday, 13 January 2014 at 4:34 pm | Permalink

    If the sale of Telstra is any example, these idiot hypocrites should get out of the game immediately. Gee they did well selling off the Commonwealth Bank didnt they? Selling the farm to pay what? Their friends? Sold to businesses and companies that don’t even pay tax because they have moved the company off shore to avoid having to contribute, then complain about the high wages and the “competition destroying work practices” ruining the country and stifling investment. They need a bit of trickle down economics themselves, and the trickle wont be jobs or wealth.

  • 7
    Jimmyhaz
    Posted Monday, 13 January 2014 at 5:09 pm | Permalink

    @David

    There is no evidence to suggest that the government is strangling free enterprise and creativity. I would actually argue the opposite, shareholders are far more informed than taxpayers, and given the nature of the stock market, long-term propositions are basically out of the question.

    Also, the purpose of the government is not to make a profit, the decisions of government-owned enterprises have to take the interests of the constituents over making money, something that private interests never do. This is the real argument against privatisation.

  • 8
    Roger Clifton
    Posted Monday, 13 January 2014 at 5:25 pm | Permalink

    Come on Auntie! If you are in need of some extra friends now, it might be time to ditch those dreadful British regional accents. Are you Australia’s national broadcaster, or an enclave of expatriates pushing British values at our expense?

    That would be a relief to those of us who are trying to teach our children that there is only one true(*) accent for the spoken language in Australia. It will also allow New Australians of non-British background to understand the mangled narrations in the ABC News. They don’t need that insult - after all, many of these people have strived to escape the parochial traditions of Europe.

    (*) Or get your ears boxed.

  • 9
    CML
    Posted Monday, 13 January 2014 at 5:29 pm | Permalink

    I don’t suppose “About 50 Commonwealth assets have been sold since 1987…” has anything to do with the structural deficit in the current federal budget, does it??? It is all very well getting a sugar hit to the government finances when these things are sold, but then there is no further income. If you think the ‘carbon tax’ raised the price of electricity to the average punter, you ain’t seen nothing yet!
    In order to maintain essential services, the government will have to raise taxes at the same time that prices for EVERYTHING from private health insurance to postage will rise. Why? Because once something is privatised, the company that bought it has to make more profit to satisfy the never ending greed of its shareholders. Where does that profit come from? The consumer/customer, of course.
    Yes, David Hand, for people like you and your mates, who appear to have an unlimited money supply, all this is good news. For the vast majority of us who will have to pay more to fill your pockets, it is definitely not on!!

  • 10
    Cathy Alexander
    Posted Monday, 13 January 2014 at 5:40 pm | Permalink

    Very good point CML. Quite a lot of those 50 assets were not huge, but some were - CBA, Qantas, Telstra, and some of the airports earned pretty big money (Sydney, Brisbane, Melbourne). Now the government does not earn a dividend from these assets - and finds itself in a debt hole (or that’s the message from the current government, anyway).

    Then of course there’s the hefty privatisations by state governments, which are not covered in this story. Power stations, banks, electricity retailers, pipelines, QR National - plenty of these were $5 billion or more, and that’s in the old money (ie not in today’s dollars). The question is did state governments use this money to secure some kind of long-running public benefit? Or did they spend it on recurrent expenditure and pork barrelling?

    If you’ve travelled on Melbourne’s train network, you’ll know the privatisation of power stations and electricity companies wasn’t used to improve access to trains.

  • 11
    AR
    Posted Monday, 13 January 2014 at 5:51 pm | Permalink

    The amazing thing about nuRite ideologues is that they are so economically irrational. Selling the family silver is like eating seedcorn, only those who hate their possible descendants could imagine it to be sensible. When that asset has been built by taxes it is straight out theft.
    (increasingly)Poor bugger, my country.

  • 12
    magoo
    Posted Monday, 13 January 2014 at 8:43 pm | Permalink

    @David
    Privately owned doesn’t preclude bad management and lack of accountability is not a purely government problem.

    http://www.worldbank.org/html/prddr/outreach/or3.htm
    Privatization is not itself a worthwhile goal without a larger purpose. The short term focus on money without any talk of what regulation would be applied or other impacts it would have is short sighted.

  • 13
    Ian
    Posted Monday, 13 January 2014 at 10:41 pm | Permalink

    I have yet to be convinced that society is any better off as a result of the privatization of inherent monopolies like Australia Post or state services like prisons and refugee camps. In fact I believe the opposite is true on many counts.
    1) The so-called efficiencies claimed of private industry are not proven and insofar as they may be achieved they are largely at the expense of labour and for the benefit of profit much of which, like our natural resources, are exported overseas.
    2) Reduced wages or reduced employment resulting from privatizations have a detrimental multiplier effect throughout the rest of the economy and in some (many?) cases trigger unemployment benefit payments from the state. Often too efficiencies come at the expense of services.
    3) Large corporations benefiting from privatizations wield increasing amounts of influence on the very governments who granted them their monopolistic privileges. They use this power to obtain benefits at the expense of the rest of society; aka as rent seeking behavior.
    4) Governments are hollowed out and become less able to deal with real crises, economic and otherwise when they occur. Strategic assets are lost to outside powers.
    5) With the decreasing role of community appointed bodies (our governments) in controlling our assets and community services, comes an increasing advance in selfish individualism at the expense of community co-operation.
    6) Once an asset or service has been sold off it is nigh impossible to re-national that industry especially when the proceeds of sales have been spent. Also powerful corporations and their international servants such as the WTO, IMF and tribunals established under free trade agreements make life very difficult for governments wanting to take back their assets. Try and imagine Australia re-nationalizing the Commonwealth Bank or the other state banks that have been privatized.
    7) Claims that privatizations actually work to improve overall services are dubious at best. Most often the reverse is true as for example the case of the manipulated Californian electricity market by Enron and more recently by JP Morgan and also the break-up and privatization of British Rail that has ended up as one of the most expensive and inefficient public transport services in the world.

  • 14
    David Hand
    Posted Monday, 13 January 2014 at 10:52 pm | Permalink

    True Magoo
    But bad management in privately owned business tends to result in failure and bankruptcy. Such an outcome tends to focus the mind in a way that public sector managers never face.

    It is the lack of commercial acumen in public sector enterprises, caused by the complete absence of risk of insolvency, that makes selling government assets a good idea.

  • 15
    Posted Monday, 13 January 2014 at 10:57 pm | Permalink

    @David Hand: you mean like how Qantas is a big success now that Alan Joyce faces consequences for incompetence?

  • 16
    David Hand
    Posted Monday, 13 January 2014 at 11:22 pm | Permalink

    Qantas is at serious risk of going out of business mate. If it was still owned by the government, there would be no insolvency problem. So this is the advantage of privatisation in practice.

    Qantas must make many hard decisions if it is to survive. The survival imperative would not exist if the government owned it and instead, the taxpayers and customers would foot the bill and the company would not change.

  • 17
    Posted Monday, 13 January 2014 at 11:31 pm | Permalink

    There is no case for selling the Hecs debt. The Australian Government can borrow funds at far lower rate than private enterprise and so it is cheaper for the government to hold the asset.

  • 18
    MJPC
    Posted Tuesday, 14 January 2014 at 9:24 am | Permalink

    Ian,

    Thank you for your thoughtful dissembling of the lie that privatisation is the land of milk and honey for all.
    Power privatisations are a prime example, they are holding onto their turf through thick and thin and averse to adopt the reality that alternate energy is parts of the future (by necessity).
    With the reality that people are using less power, they want to screw the subscribers mercilessly to maintain their lowering profits.
    Of course they blame it all on the Carbon Tax now, come July what excuse will they use when prices do not lower by +10%?
    If government owned the profit motive is lessened and lowering energy usage is seen as a benefit, not as a liability.
    Capitalism, where the losses are nationalised, the profits are capitalised; Revolution now!

  • 19
    terry morris
    Posted Tuesday, 14 January 2014 at 9:54 am | Permalink

    People in the bush have often have little access to the interwebby thing, or if they do it’s unreliable. Even mobile phone signals fail once you get off the main roads. So if you want to sell Australia Post and get rid of the letter delivery side of things you’d better make sure the interweb is accessable and reliable for everyone. NBN- are you sure we can’t afford it?

  • 20
    Brendan Jones
    Posted Tuesday, 14 January 2014 at 10:51 am | Permalink

    What about privatising the DSTO (Defence’s own version of the CSIRO)?

    The DSTO’s $440M budget could be offered to the private sector. The Libs claim to be committed to the free enterprise system. Privatising the DSTO could deliver far more innovative and a better outcomes on that investment than a public bureaucracy. DSTO scientists, the good ones, could actually do better under this, and wouldn’t have to carry organisational deadwood. It’ll also give better value for money to the taxpayer and the ADF would get better advice, independent of the DSTO’s (in their own words) “wealth creation” role.

    Currently the DSTO are both a supplier to and an evaluator for the Department of Defence; Outside innovators are expected to hand their technology to a competitor(!) to evaluate. That conflict of interest has lead to DSTO scientists passing confidential IP to their own business partners (repaid as royalty kickbacks) and questionable evaluations conducted for the ADF favouring the DSTO’s own products and business partners. A Senior ADF officer told me the DSTO gives their own interests priority over those of the ADF, and incredibly DSTO lawyers Clayton Utz say the DSTO has no duty of care to provide the ADF with evaluations that are either fair, proper and accurate, nor to respect confidential information. One executive at a large defence company said: “Australia is a really bad place to do business because your biggest competitor is the DSTO, and they have a monopoly.” http://www.crikey.com.au/2013/12/02/revealed-the-government-agency-stealing-ideas-from-businesses/

    Labor’s draconian Defence Trade Controls Law made the situation even worse. It makes IP theft by public servants even easier, and wraps the university and private high-tech sectors in public service red tape. University of Sydney DVCR Jill Trewhella warned: The Australian government worries about a brain drain in advanced technology, but is poised to pass legislation that could force our best and brightest offshore … they’re definitely telling me that they’re going to have to assess the impact of this regulatory regime on their ability to be competitive and to do their work in Australia. They’re definitely worried that it is going to have a big impact and they’re concerned that they may have to go elsewhere to do their research.” Labor passed that law regardless. They wouldn’t even agree to some very reasonable changes to allow basic research; It was sheer arrogance by the public service and Labor. http://victimsofdsto.com/dtca

    Meanwhile Australia’s high-tech industry is currently packing up and heading off shore. The US also has better access to talent, connections and venture capital. The mining sector is doing well for us, but if the Libs don’t move we won’t have a high-tech sector left. http://www.smh.com.au/business/too-expensive — tech-startups- move-overseas-20140108-30g4u.html

    In case there are the Liberal Party socialists (LOL) who don’t want to privatise defence research because of “National Security”, the US has been doing it for a long time through DARPA and their US DoD Small Business Programs. Australia has nothing like these.

    (AFAIK Last review of the DSTO was done by Robert Trenberth in 2004. He was scathing of their commercialisation efforts - money-losing spinoffs and shareholdings, except for one which he said should be studied to see what factors made it so successful (which turned out to be stolen IP. Oops.) Industry and the ADF had complained the DSTO suffered from “Not Invented Here Syndrome”, and was unfairly turning private-sector innovators. Funds were set aside for industry projects but the DSTO ended up awarding those to its own scientists. Industry complained but Trenberth claimed this wasn’t due to conflict of interest, but because the DSTO was better. This was very weakly argued in his review but even if it’s true, then good scientists have nothing to fear. Right? http://www.dsto.defence.gov.au/publications/6871/trenberth_review%5B1%5D.pdf )

    IMO Government shouldn’t compete with business, using their own taxes against them. It’s also too easy for government to abuse it’s power, and that harms business and the citizenry. SCOTUS Justice Brandeis: “The objections to despotism and monopoly are fundamental in human nature. They rest upon the innate and ineradicable selfishness of man. They rest upon the fact that absolute power inevitably leads to abuse.”

    Many examples, but if you’d like one more: The US DoD used to distribute a free worldwide aviation database; every airstrip and navigation aid on the planet. But they dropped it up after our own Airservices Australia whined it was competing with their “business.” Now no one outside of the US military can get it. And all to mollycoddle the egos of Australian public servants who think they’re there to cash in.

  • 21
    David Hand
    Posted Tuesday, 14 January 2014 at 1:55 pm | Permalink

    Well MJPC,
    Keep dreaming of your revolution but your main problem is the vast majority of Australians are too content enjoying the fruits of a deregulated capitalist economy to man the barricades for you mate.

    Revolutions work when there is a large mass of exploited people supplying a lavish lifestyle to a tiny minority. This is of course a favourite theme of the bruvvers and public servants who populate Crikey but a glance outside into the real world would show it up for the fiction that it is.

    Australia’s story is that the majority are doing very nicely thank you. Over 900,000 Australians took an overseas trip in 2012, about 90% of them on holiday.

    This historically high standard of living enjoyed by the majority of Australians has been significantly assisted by more efficient business practices brought about by privatisation. I am absolutely confident that air tickets to Bali would be much more expensive under a publicly owned Qantas. You wouldn’t have the Jetstar brand for starters.

  • 22
    Ian
    Posted Tuesday, 14 January 2014 at 3:38 pm | Permalink

    David,

    …Australians are too content enjoying the fruits of a deregulated capitalist economy to man the barricades…”

    Really? You mean it’s deregulation that’s done the trick is it just like it’s done in the US and UK presumably? And aren’t they powering along just fine?

    All I can say is thank God (in the short term) for China without whom we would find it very difficult to flog off our natural resources at anything like the rate we have been doing. That is the main reason we have not seen those barricades you speak of being manned - in spite of the fact that we ARE being hollowed out by destructive neo-liberal forces.

  • 23
    David Hand
    Posted Tuesday, 14 January 2014 at 5:09 pm | Permalink

    That’s right Ian,
    The deregulation enacted by the Hawke and Keating governments, which were in my view the most visionary reforming governments since federation, transformed our economy for the better in a way that will still have influence out to 2100.

    The criminal acts by wide boys in the finance sector came about through a specific and stupid law change in the USA. Deregulation is far wider than that.

    If you want an example of regulated economies, just look at the mess they are in in Europe. Locked in behind their absurd customs barrier, they’ll be worse off than the countries they were trying to keep out in the next two decades if they don’t change.

    The UK has the strongest economy in Europe at the moment.

  • 24
    The Pav
    Posted Tuesday, 14 January 2014 at 6:57 pm | Permalink

    Abbott sold his soul so why would there be any restrictions on anything else

  • 25
    Jimmyhaz
    Posted Tuesday, 14 January 2014 at 9:18 pm | Permalink

    @David

    The problems that Europe faces at the moment have nothing to do with regulations or lack-thereof, in fact, the problems that they face can be tied down to one specific area, that none of the countries within the Eurozone have control over their own currency, significantly limiting the fiscal policies that they can enact.

    I personally don’t see neo-liberalism as a real economic theory, it’s more of an excuse thought up by those born into power and wealth to keep themselves there. There is no academia backing it up, no studies affirming that deregulation has any net positive effect on a society, the only real data that I have seen on the subject has posited that it exacerbates the normal boom/bust cycle of economies, making the booms massive, and the busts spectacular.

    The stupid law change that you spoke of was part of this wider goal of deregulation in the US, and it would suggest that deregulation is in fact not something that we should strive for, but rather that we should look at each and every law on its merits, and dismantle them if their is more negative than positive to keeping it in place. After all I don’t see many people advocating for a return to when we could dump in the Brisbane river, however doing so would definitely give us some deregulation brownie points.

    Also, given that 10% of our society currently holds 50% of our net assets, and that the gap between rich and poor is getting larger, I would suggest that the revolution is definitely coming our way.

  • 26
    David Hand
    Posted Tuesday, 14 January 2014 at 9:36 pm | Permalink

    Neo-liberalism is one of those trendy lefty meaningless words that people usually apply in a pejorative way. It sort of means what evil corporations do in their role as the bad guys in the majority of Hollywood movies.

    I think.

    I do think that your point about wealth distribution has merit. It is bad for all of us if the gap between rich and poor grows too wide. But the solutions are very difficult to implement because it is the top 10% that create all the wealth and pay almost all the tax that is distributed to that enormous non-contributing welfare dependent sector of our society.

    It is more likely that welfare dependency has far more to do with the widening gap between rich and poor than greedy billionaaires. For example, we introduce disability support payments and after a few years end up with 800,000 Australians getting it. They are definitely not getting richer on it and the taxpayers’ ability to create the wealth is unlikely to close the gap any time soon.

    Let’s get practical here. How would confiscating Gina Reinhart’s $15 billion actually enrich 800,000 disability support recipients? That’s less that $20 grand each. Plus the demise of half the iron ore industry in the Pilbara. Hey it might pay for an overseas holiday or two.

    What about Hollande’s 70% income tax? Think that will work?

  • 27
    Jimmyhaz
    Posted Tuesday, 14 January 2014 at 11:18 pm | Permalink

    The thing with income tax is that it doesn’t actually go to pay for anything (after all we have control of our own currency, and are therefore non-revenue dependant), the reason it exists is to reduce inequality, and to drive demand for the Australian dollar. The rich paying a vast majority of the taxes means that it is doing exactly what it is supposed to do.

    Following on from that, I don’t agree with your point that the rich create all the wealth, I would actually suggest that this is in fact baseless propaganda distributed by the wealthy to affirm their elite status. Like it or not (and I really don’t, my ego always gets in the way here) the government is the sole creator of wealth in any country with its own currency, it chooses how this wealth is deployed, how it interacts with our sovereign currencies, and of course how this wealth is taxed. Any inequities, any poverty, and any extreme concentration of wealth is something that the government can do something about (I’m not saying they should, merely that they can).

    People being on welfare payments tells me that the welfare is doing its job, I’m not a fan of welfare, and campaign for a basic income in place of the patchwork rubbish currently implemented, however expanding welfare is the best form of economic stimulus that the government has in its arsenal (funnily enough tax cuts to the rich and quantitative easing actually slow down the economy, and yet the LNP campaign for these?). Welfare dependency also seems like a symptom rather than a cause, a fraud rate of ~1% in welfare payments (this is for the US and the UK, but I’m going to extrapolate it to Australia), would suggest that this money is going to those who genuinely need it.

    Also I’m not a fan of Hollande’s tax, especially in the way it is currently implemented, either implement it fairly or don’t do it all. That government should really reconsider renaming itself as well, if it isn’t going to give the power of production to the workers then it isn’t a socialist government.

    Finally I would like to see Reinhart’s wealth taken away, however I’d then set it on fire in front of her eyes and leave her in the mining towns with the workers that she wants to pay $2 an hour to. She is a terrible human being that has done absolutely nothing to deserve the enormous amount that she owns.

  • 28
    Ian
    Posted Wednesday, 15 January 2014 at 1:20 pm | Permalink

    Jimmy,

    Thanks for saving me the trouble of responding to David’s nonsense. There is a lot more that can be said about the broken neo-liberal model but what’s the point? Responding to entrenched ideological beliefs with facts or contradictory evidence is a waste of time and effort and can be stressful.

  • 29
    drmick
    Posted Wednesday, 15 January 2014 at 2:29 pm | Permalink

    If you are not going to get down on your knees and thank the gods for the insightful revelations and immediately convert to the fabulous “trooths” you have been offered Ian; do not feed the troll. It may affect any regularity problems you have but generally, this is the fibre you can do without. It will just keep repeating on you.

  • 30
    Cathy Alexander
    Posted Wednesday, 15 January 2014 at 4:08 pm | Permalink

    Hadn’t considered the DSTO Brendan Jones. Will dig around. Thanks for the heads’ up.

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