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Examples of absurdities of Privatisation and benefits of public services

Today the Australian Financial Review carried a surprising and uncharacteristic number of remarks about the high cost of privatisation and the benefits of public provision of vital services.

Energy

"The Energy Supply Association of Australia said falling demand for power meant the Coalition must review its energy and climate change policy if it gains power at the September 14 federal election." (The Financial Review, 24/4/2013, p1 & 4)

It seems that power companies want us all to buy more power, even though everyone talks about cutting down emissions and consumption. But, if your company depends on constantly increasing turnover because it has to make a profit (unlike a public power provider), it cannot afford to promote conservation of resources and significantly lower emissions.

On page 4 the Fin Review opines, "[The opposition] is also likely to consider cutting the 20 per cent Renewable Energy Target if electricity demand remains weak."

In other words, to please the privateers, it sounds as if the opposition is willing to fry or freeze us all - depending on whether Greenhouse plays out before we actually run our reserves of fossil fuels right down.

Furthermore, amazingly, there are admissions that the effects of private 'competition' are RAISING prices:

"The main driver of gas price increases for 2013 was increased retail operating costs, including the costs of acquiring and retaining customers in an increasingly competitive market."

So, folks, not only are you driven crazy by telemarketers and doorknockers trying to talk you into changing your gas provider every three weeks for cheaper services, but all that sales-offensive is driving the prices up, not down. The profit motive raises costs. Privatisation costs us all.

Well, we already knew that, didn't we?

Competition policy in W.A. wound back

Already in 2011, West Australia's premier, Colin Barnett, found that increasing the number of private companies handling power had been counterproductive. He said that the break-up of Western Power five years prior had 'clearly failed'.

“There is absolutely no doubt that what the previous Labor government did in breaking up Western Power has not worked.

“When that was put in place, the promise from Eric Ripper at the time was that it would lower electricity prices.

“It’s had the exact opposite effect.”" (Source: Gareth Parker, "Premier plans electricity overhaul," The West Australian September 20, 2011

And Public medicine does keep costs down

In "Saving the budget and Medicare,"AFR, 24/4/2013, p.42, Alan Mitchell writes of the Australian medical benefits system:

"Medicare and the public hospital funding agreements with the states are designed to keep the lid on healthcare spending, and even its critics accept that it has been crudely effective."

and

"An unrestrained private market, the Medicare apologists warn, is an invitation for monopoly pricing and over-servicing. That's what America's private healthcare market has produced. In the US almost 18 per cent of nominal GDP is spent on healthcare, compared with just over 9 per cent in Australia."

And what about the Private Property Development and Housing Industry?

This lesson should be applied to the property development lobby. For many years France and most continental European countries have kept housing prices down by running public land development and housing as a major competitor with private property development and housing. It works very well.

Whitlam tried to bring in the same system with DURD. I've always wondered if that was the real reason that he was dismissed. (See Chapter 7 of The Growth Lobby and its Absence. )

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Comments

My electricity billing company recently sent me a pamphlet outlining my rights not to answer the door or take phone calls from other companies who would steal my business from them. This exercise to all customers would have a significant cost.

The coalition claims that privatized companies are more efficient than public ownership. An historical overview shows that efficiency depends upon the leadership in both public and private businesses. That is the key factor.

Ideology is the main factor driving the coalition – meaning that profit for private interests comes before national interest. Looking at public assets for sale or sold or open for sale, by both coalition and Labor governments, short-term funds for the government that sells off the public assets is their major consideration, regardless of the future golden eggs the geese may produce.

The sale of Medibank Private is against the public interest.

It is a cash cow for the present and future governments.
It is the best way of keeping premiums of all the private medical insurance schemes down, which otherwise can rocket. See the American example, which should frighten us. ‘Regulation’ is open to manipulation for private profit and can be bureaucratic tangles without the publicly owned Medibank Private to set the example.
It does not cost the public anything.
Offices combined with Medicare offices are efficient.

Val Yule

All sales of public assets need to be fought by the public who own them. The examples of past sales should frighten us - e.g Telstra and airport parking,

I wrote "Examples of absurdities of Privatisation and benefits of public services" (the article above) on 2013-04-25, citing the Financial Review, West Australia's premier, Colin Barnett, and Alan Mitchell on how privatisation raises costs. Despite what just about any Australian citizen on the ground would tell you, the Chairman of the ACCC, Rod Sims, had a front page gig on the Financial Review yesterday, urging more privatisation. In "ACCC calls for big asset sell--off," by Patrick Durkin, this is what Sims is quoted as saying:

"There is no doubt in my mind that energy prices, particularly in NSW and Queensland, would now be lower had the private sector owned those network business rather than them staying in the public sector. I don't think there is any doubt about that."

I see this as an irresponsible, ideological stance in the service of big business. It is undemocratic, unresponsive to the concerns of the electorate. We do not need this kind of ideologue in control of Australian assets. We need people who care about the rest of us. I think it is scandalous that such a man should be in charge of the ACCC, should have any direct capacity to message the prime minister and it is a pity that the Financial Review gives him a platform, but we all know that the Australian Press is an authoritarian and anti-egalitarian one, sadly.

The mass media in Australia is generally for open borders, open markets and every man for himself. In addition, newspapers just print day to day news without regard to what they printed the day before. Candobetter tries to give you access to continuity and contrast, in order to make the contradictions and lies of our leaders and corporates more obvious.