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.
"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."
"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. )