Until I got the boot a couple of years ago, I had a regular column in the Australian Financial Review. Since then, I’ve been freelancing, with mixed success. Friday was a good day, with two pieces appearing within a few hours of each other. This one, at the Guardian is on the obsolescence of the late 19th and 20th century idea of the Press (or the media) as an institution with special rights and responsibilities.
The other was a reply to an editorial in the local Murdoch paper, pushing the case for privatisation. They printed it, which is more than the national Murdoch rag (The Australian) has done in similar cases. It’s over the fold
In a recent editorial, the Courier-Mail bemoans the fact that nearly thirty years after Paul Keating began the privatisation agenda, three in four Queenslanders are still opposed to the sale of public assets. In fact, the situation is more dire than that. Back in the 1980s when Keating ‘instinctively’ grasped the case for privatisation, opinion polls suggested that much of the public was receptive to the idea: publicly owned utilities were seen as slow and stodgy and didn’t have much of a reputation for public service.
Public opposition to privatisation isn’t the result of fear of the unknown or misunderstanding of the arguments. Rather, it’s the product of decades of experience. Far from producing lean, innovative and customer focused organizations, privatisation and corporatisation have given us bloated and overpaid management, higher prices, and customer service that ranges from limited to appalling.
On the other hand, privatisation has been a boon for the financial sector and for the various associated services (legal, accounting, consulting and so on) that dominate the CBD, and the thinking of those who work there. The result is a deep, and enduring, disconnect between the views of the policy elite and those of the general public.
The core of the editorial is the sentence “It does seem amazing that three out of four Queenslanders still can’t accept what is a pretty basic argument that governments don’t have any business running ports or selling electricity”. There are two big problems here.
First this isn’t an argument but an ideological assertion. While the ideology of privatisation is almost universally accepted among the policy elite and in the financial sector, it’s the reverse of the view that prevailed in Australia for most of our history, and worked well enough to provide us with the assets we are now arguing about.
The idea that governments should get out of the infrastructure business, leaving the funding of new investments to the financial sector came into vogue during the economic crisis of the 1970s. For a while, it seemed to be working well, as financial markets boomed in the 1990s. But, in the wake of the Global Financial Crisis, the idea of leaving everything to the financial sector looks less appealing.
More seriously, the public has never been given any serious opportunity to debate the free-market case for privatisation, presumably because politicians realised it was unsaleable. Although the statements of former ministers make it clear that the Bligh Labor government was fully convinced of the free-market case, nothing of the kind was presented to voters.
Instead, we got a spurious case based on the idea that we could sell income-generating public assets and use the proceeds to fund investments in schools and hospitals. The question of how the income flow from the privatised assets would be replaced was never addressed. The Bligh government’s case was so misleading that more than 20 leading economists, including advocates of the free-market argument for privatisation, signed a statement condemning it.
Treasurer Tim Nicholls has gone one better. In his presentation, embodied in the ‘Strong Choices’ website and echoed in the Courier-Mail editorial, we can not only use the proceeds of asset sales to build infrastructure, we can simultaneously use the same money to pay down debt and then spend the interest savings on schools and hospitals.
The Courier-Mail suggests that critics of privatisation are telling us we can have our cake and eat it. But the pro-privatisation case is even worse. It is a magic pudding that we can it seems, slice and eat, however many times we want.
The sad truth, admitted even by the government’s own Audit Commission, and recognised by the public response to the Strong Choices website is that there are no magic puddings.
Successive governments have sold us the myth that Queensland can be a low tax state while still enjoying public services of the same quality as high-tax southern states. While the mining boom lasted, this might have been true. But now we face a clear choice: either pay the same taxes as other states, or accept overcrowded schools and second-rate health services. This choice, and not the financial chicanery of ‘Non–Share Equity Interests’ is what we should be debating at the next election.