In
Traralgon, a local woman explains the promises made to the community
when Victoria’s electricity system was privatised. Her husband and
hundreds of others were encouraged to take the redundancy package with
the promise they’d be hired back as contractors. It never happened and
an entire generation never got jobs again.
This woman isn’t the only person starting to question the legitimacy of privatisation. For a generation, it has been one of the defining ideas of the Australian economy. Governments of both sides have shown an almost unquestioning commitment to its value as a policy tool. But now proponents are suggesting a need to rethink its role.
What has suddenly changed? When the Abbott government was elected, it couldn’t rush fast enough to privatise, earmarking $130bn of public assets for privatisation. Within a few short years though, the rock-solid edifice of political support has fractured. While governments still reflexively invoke privatisation as a first course of action, they have recently started to back away. The Turnbull government’s decision to abandon the sale of the Asic registry is one such example.
The main reason for the change is that voters are looking at economic issues, including privatisation, through a different lens and politicians are starting to take notice. For 30 years, the debate around privatisation has essentially taken place among the elites. The public was rarely asked about the merits of privatising any specific sector. The elite debate was couched in terms completely alien to ordinary citizens. Arguments made to the public were based on “cost-benefit analyses”, “efficiency dividends” and “fiscal responsibility”. They sounded credible and impressive, and for several decades, they provided the political cover to pursue privatisation at will.
Yet over time, the reality didn’t match the promise. Despite the impressive sounding phrases, people’s experience of public services and assets didn’t get better after privatisation. It got worse. It took some time for this to become clear because, very simply, no one asked. Governments outsourced their decision-making capacity, shedding experienced public servants and buying advice from accounting and consulting firms whose businesses benefited from continuing privatisation. Productivity Commission inquiries came and went, consulting with peak bodies, citing academics, and promoting further privatisations, but rarely asking communities what they thought.
That’s now changed. Over the last year, the People’s Inquiry into Privatisation has travelled across Australia visiting big cities and regional towns, asking people for their impressions of privatised assets and services. As chair of theinquiry, I’ve had the privilege of listening to the stories of hundreds of ordinary Australians who’ve described in quiet, dignified voices how privatisation has hurt their families and communities. This is the lens through which citizens view privatisation, and it’s far removed from efficiency dividends.
The examples are enormously diverse. In Wollongong, a student recruited by a new private vocational college was re-enrolled in a second course when she couldn’t finish the first one. She now has a $30,000 debt and nothing to show for it. All this while we’ve actively dismantled Tafe.
In Cairns, an electricity worker describes the impact of job losses through privatisation on small regional towns – families leave the school which in turn loses teachers and so can’t attract new families. Then the single shop closes downs, and on it goes.
In Adelaide, a group of private surveyors and public servants discuss their disbelief at the sell-off of the Land Titles Office. The Torrens system, invented in South Australia, is the cornerstone of legal property ownership and these professionals believe it’s an unnecessary madness to entrust it to an untested private provider.
And in Perth and Sydney, families of people with profound disabilities are distraught at the prospect that governments are closing and selling off the specialist accommodation which has housed their relatives for decades.
Set against these stories is the clear evidence that the main beneficiaries of privatisation have been the multinational service companies and foreign government-owned corporations that now charge us for services Australia once owned. Why should the Singaporean and Chinese governments profit from rising prices in a failing (privatised) electricity network in Australia?
When a former Coalition treasurer calls for a renationalisation of the pension system, or the country’s competition chief argues that privatisation has damaged our economy, you get the sense the game is up.
So what should governments do? First, we need a moratorium on all proposed privatisations until we get a stronger framework in place. Second, we need an independent regulatory body to oversee all privatised services for accountability and compliance. We need to remove tender cost as a criterion of privatisation, removing the race to the bottom we’ve seen in outsourced services. And we need to rebuild public capacity across our community, from the resuscitation of Tafe to new renewable energy networks.
The ideological commitment to privatisation, like that of its cousin neoliberalism, is slipping. Expect to see more former champions lining up in support of public ownership. And embrace it when they do.
This woman isn’t the only person starting to question the legitimacy of privatisation. For a generation, it has been one of the defining ideas of the Australian economy. Governments of both sides have shown an almost unquestioning commitment to its value as a policy tool. But now proponents are suggesting a need to rethink its role.
What has suddenly changed? When the Abbott government was elected, it couldn’t rush fast enough to privatise, earmarking $130bn of public assets for privatisation. Within a few short years though, the rock-solid edifice of political support has fractured. While governments still reflexively invoke privatisation as a first course of action, they have recently started to back away. The Turnbull government’s decision to abandon the sale of the Asic registry is one such example.
The main reason for the change is that voters are looking at economic issues, including privatisation, through a different lens and politicians are starting to take notice. For 30 years, the debate around privatisation has essentially taken place among the elites. The public was rarely asked about the merits of privatising any specific sector. The elite debate was couched in terms completely alien to ordinary citizens. Arguments made to the public were based on “cost-benefit analyses”, “efficiency dividends” and “fiscal responsibility”. They sounded credible and impressive, and for several decades, they provided the political cover to pursue privatisation at will.
Yet over time, the reality didn’t match the promise. Despite the impressive sounding phrases, people’s experience of public services and assets didn’t get better after privatisation. It got worse. It took some time for this to become clear because, very simply, no one asked. Governments outsourced their decision-making capacity, shedding experienced public servants and buying advice from accounting and consulting firms whose businesses benefited from continuing privatisation. Productivity Commission inquiries came and went, consulting with peak bodies, citing academics, and promoting further privatisations, but rarely asking communities what they thought.
That’s now changed. Over the last year, the People’s Inquiry into Privatisation has travelled across Australia visiting big cities and regional towns, asking people for their impressions of privatised assets and services. As chair of theinquiry, I’ve had the privilege of listening to the stories of hundreds of ordinary Australians who’ve described in quiet, dignified voices how privatisation has hurt their families and communities. This is the lens through which citizens view privatisation, and it’s far removed from efficiency dividends.
The examples are enormously diverse. In Wollongong, a student recruited by a new private vocational college was re-enrolled in a second course when she couldn’t finish the first one. She now has a $30,000 debt and nothing to show for it. All this while we’ve actively dismantled Tafe.
In Cairns, an electricity worker describes the impact of job losses through privatisation on small regional towns – families leave the school which in turn loses teachers and so can’t attract new families. Then the single shop closes downs, and on it goes.
In Adelaide, a group of private surveyors and public servants discuss their disbelief at the sell-off of the Land Titles Office. The Torrens system, invented in South Australia, is the cornerstone of legal property ownership and these professionals believe it’s an unnecessary madness to entrust it to an untested private provider.
And in Perth and Sydney, families of people with profound disabilities are distraught at the prospect that governments are closing and selling off the specialist accommodation which has housed their relatives for decades.
Set against these stories is the clear evidence that the main beneficiaries of privatisation have been the multinational service companies and foreign government-owned corporations that now charge us for services Australia once owned. Why should the Singaporean and Chinese governments profit from rising prices in a failing (privatised) electricity network in Australia?
When a former Coalition treasurer calls for a renationalisation of the pension system, or the country’s competition chief argues that privatisation has damaged our economy, you get the sense the game is up.
So what should governments do? First, we need a moratorium on all proposed privatisations until we get a stronger framework in place. Second, we need an independent regulatory body to oversee all privatised services for accountability and compliance. We need to remove tender cost as a criterion of privatisation, removing the race to the bottom we’ve seen in outsourced services. And we need to rebuild public capacity across our community, from the resuscitation of Tafe to new renewable energy networks.
The ideological commitment to privatisation, like that of its cousin neoliberalism, is slipping. Expect to see more former champions lining up in support of public ownership. And embrace it when they do.
- David Hetherington is a senior fellow at Per Capita and chair of the People’s Inquiry into Privatisation, which launches its final report on Monday at the State Library of Victoria
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