Why privatisation is wrong

Justice Michael Kirby on
" id="KirbyOnPrivatisation">Why Privatisation is wrong

The Hon Justice Michael Kirby AC CMG*, went to the trouble in 2006 to warn-fn1">1 Australians about the dangers of privatization removing important government functions to a position beyond the laws made to administer them fairly.

He said “The ‘commercialisation’ of the public sector means that isolating the activities and decisions of government from those of the private sector is becoming a more complicated, and sometimes, seemingly, an impossible exercise.”(p.3)

“The exercise of public power is fundamentally different in character to the making of a decision in a purely private context. Decisions are then being made on behalf of the people, typically involving the use of money raised from, and power derived from, the people. Higher standards of accountability and responsibility are therefore attached to the decisionmaker. Public power imports public accountability, including before the courts.” (p.4)

“This reduction in accountability is a result of removing control over day-to-day actions and decisions from the relevant Minister and government departments to private sector bodies whose ultimate legal responsibility is to their shareholders, rather than to the public interest more generally.” (p.6)

He goes on to describe the outcome of a series of cases involving the High Court where the law encountered problems in getting public accountability. This problem arose in NEAT Domestic Trading Pty Ltd v AWB Ltd (2003) 216 CLR 277. It involved officials of the Wheat Board who had refused six applications from another trader(NEAT) to export bulk wheat. The AWB had acquired through its creation by government, the power to prevent by veto bulk wheat exports from Australia. It could do this by withholding approval. The power to approve or veto exports normally belongs to a government body because it is a legal power. As such it is normally reviewable and controllable through the courts. That is, the judicial representatives of “we the public” can ensure that Australian trade is conducted fairly.

The outcome of this case was that Australians had lost the power to control the nation’s wheat exports by giving that power to this private body.

Because of this case, and others, it seems very wrong for Mr Carr, Mr Keating, the Murdoch Press and the many others we hear of to be urging Mr Iemma to privatize electricity against the will of the bulk of the NSW electorate and the NSW Labor Party.

The government has given up a great deal of control to corporations in the area of banking (through deregulation) and the banks have become too strong to effectively control. There seems every reason for Australians to disbelieve reassurances that all will be well with the corporatisation and privatization of electricity, water, ports and municipal government functions and assets.

Privatisation means transferring the powers conferred by ownership of an influential or vital asset or trade from elected government to private individuals. The only reason government gained control of them in the first place was because communities gave them that control. The communities did not ever give them the power to transfer those assets and resources. This power has been achieved without real consent. In the case of our electricity, water and savings, this means that we are (involuntarily) giving up control over resources and assets upon which our comfort and ultimately our lives depend.

Peoples form governments to protect them from this kind of situation yet our State and Federal governments are gradually removing the protections they were created to provide.

This is a bad thing and Australians have reason for grave concern.

Justice Kirby concluded, “It is no good Australia preaching good governance of other lands if it neglects the issue at home.

“I commend a reflection upon these aspects of governance to all participants in this conference concerned with the basic parameters of accountability in the deployment of public power. Public power and the use of public funds beget the need for public accountability. We should never forget or neglect this basic rule.” (p.14)

But most Australians have either forgotten or given up on this simple rule.

The speech referred to was by Justice Kirby, in the University of Canberra, Corporate Governnace ARC Research Project, Corporate Governance in the Public Sector Dinner, High Court of Australia, Canberra, 9 March 2006. The speech is downloadable from as 53K pdf file.

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