The great privatisation con

By Leith van Onselen

Fairfax’s Ross Gittins yesterday penned an excellent article lamenting the neoliberal obsession with privatisation, which is unambiguously making Australians worse-off:

Many people feared that if private businesses were allowed to buy government businesses, the first thing they’d do would be to jack up their prices. Politicians and supposed experts told them not to worry. Sorry, experts wrong, doubting punters right.

In some cases, the businesses privatised were natural monopolies…

If you wonder why parking is so expensive at airports – and catching a taxi home comes with an extra fee – it’s because the Keating government privatised these geographic monopolies without price controls.

With the state governments’ privatisation of their ports, some private lessees have been allowed to fatten their profits in ways too diffuse for us to see how we’re being got at.

Well said. Despite decades of privatisation and marketisation of public services and assets, there is no evidence of user charges falling, or government spending abating. Quite the opposite, in fact. Yet this is what you’d expect were the privatisers to deliver the promised efficiency gains promised by the neoliberals.

The situation has gone so awry that Australian Competition and Consumer Commission (ACCC) head, Rod Sims, has issued a spate of warnings about, and voiced opposition to, the proliferation of privatisations being undertaken across the country:

…”we’re doing it wrong” in our national approach to privatisation and the public’s increasing scepticism of what should be a lever of enhanced economic efficiency is well justified.

“In my view, it is seeing prices rise. In my view therefore the public – who associate privatisation with higher prices – they’re more right than wrong. And so we shouldn’t single the public out in saying ‘What do they know, they just don’t understand the argument?’

“They understand it very well. They see that we have been privatising in ways that push up prices and we shouldn’t be doing it because we’re actually harming the whole concept of privatisation itself”…

“Privatisation is not popular if you take a vote, because people believe it leads to high prices. They’re right. Often privatisation does lead to higher prices because we privatise for the wrong reasons and in the wrong way… we [should] privatise for the economic efficiency reasons, not to raise money”…

“The examples abound of privatising in the wrong way… Sydney Airport, [where][ the government doubled – I’ll say it again, doubled – the landing charges prior to selling it. They put no constraints on parking fees or anything else and they also gave the [new] owner the first right of refusal over the second Sydney airport so that there would be no competition and you boost price. [It was] a terrible example of how not to privatise”.

“The Port of Melbourne tried to increase the rents on the land by 750 per cent as they were privatising the port… You have to ask, what were they thinking?”

The problem with neoliberalism is that it eventually has nothing left to sell-off, and will eventually leave citizens as nothing more than renters of their own country.

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