New South Wales

Jun 6, 2014

State privatisation schemes a dumb idea, regardless of the spin

Queensland and NSW have some seemingly well-crafted spin to try to sell their privatisation schemes. But Economist and University of Queensland academic John Quiggin says any way you cut it, privatisation will not make the states any money.

Both the Queensland and New South Wales governments are attempting to embark on a large-scale program of asset sales. But convincing the public will be tricky, as people are opposed to privatisation — as they should be.

57 comments

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57 thoughts on “State privatisation schemes a dumb idea, regardless of the spin

  1. The Pav

    Could somebody please point out a privatisation that has ever worked as promised by the proponents or not failed as suggested by the opponents.

    I still don’t like Howard but there is some character and i honestly believe he wouldn’t have tolerated Bishop as speaker.

  2. Jaybuoy

    not to mention the slushy fees generated by the spiv end of town on the way through..

  3. Luke Hellboy

    The common results for so-called Public Private Partnerships that I’ve seen is that if the project turns a profit, the private gets a majority of it, if it turns a debt, the public get to eat it.

  4. David Hand

    Privatising the Commonwealth Bank, Qantas, Telstra and other entities have all worked very well.

    Those who take a different view tend to look at the profits most of these businesses make without acknowledging that they would never be a profitable under public ownership.

    The main argument for privatisation is that public servants are pretty useless at running businesses. The most compelling argument for retaining public ownership is in the case of natural monopolies. The distribution networks of electricity being a case in point.

  5. Nancy Wallace

    Sadly no. These enterprises were all profitable before they were sold, as you can easily check. In all the cases you mention, the sale price was less than the present value of the earnings foregone.

  6. Dogs breakfast

    “The economic reasoning is simple: in general, selling an income-generating asset and using the proceeds to repay debt makes no difference to the net financial position of a household, corporation or government.”

    Thank you Professor Quiggin. This concept was completely beyond the intellectual gifts of Peter Costello, the entire media pack at the time, and consequently the general public. The general public still thinks that the libs paid off great wads of public debt (at tiny interest rates) while selling off assets that were earning returns close to double the government interst rates, and it was bought hook line and sinke by the unthinking public as a good thing!!!!!!!!!!!!!!!!

    “This is melting down your tools for scrap and using the money to pay the rent.”

    Halle effing lujah!

    Now, I wonder what public project of great investment value which will be a natural monopoly and set Australia up for the future are we currently ignoring, or selling down.

    NBN anyone. The great ideologues of the free market don’t understand the most basic difference between an investment and dead money.

    Nongs

  7. Dogs breakfast

    “Those who take a different view tend to look at the profits most of these businesses make without acknowledging that they would never be a profitable under public ownership.”

    Ideological claptrap! Demonstrably false. Wrong.

    “The main argument for privatisation is that public servants are pretty useless at running businesses.”

    And clearly, the only way around that problem would be to sell the business. Imaginative!

    “The most compelling argument for retaining public ownership is in the case of natural monopolies”

    What, like building an NBN?

  8. David Hand

    Nancy,
    What you do not take into account is the dramatic improvement in the profitability that these privatised businesses have achieved and the resulting tax they pay. People who oppose such privatisations just assume that the performance is as good in public ownership when it is not.

    This is evident from our latest worked example, the NBN.

  9. AR

    One Hand – “the profitability that these privatised businesses have achieved and the resulting tax they pay.” demonstrates the Raygun/Laffer (which even the latter had the decency to recant)conjob, the trickle down effect, aka being pissed on from above and told that it’s raining.
    The main reason that electricity prices rose so steeply in the last couple of years was the gold plating of the distribution network (poles & wires) specifically to obviate the privatised enterprises needing to pay for it after being sold.
    The oldie mouldie, “social the costs, privatise the profit”

  10. AR

    Wanker – I was laughing so much at your previous idiocies that I missed this final gem – “This (?troothiness?) is evident from our latest worked example, the NBN
    As was said of il Duce, it is impossible to parody a buffoon.

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