'Asset recycling': Another giant privatisation scam

Heritage-listed public housing at inner-city Millers Point has been sold for nearly $450 million.
September 8, 2017

The NSW Coalition government has sold off more than $9 billion in publicly-owned property since it took power six years ago, a state parliamentary inquiry was told on September 4.

"Over the last six years ... approximately $9.14 billion of real property assets have been recycled [sold or leased] by government agencies," the CEO of Property NSW Brett Newman told a Budget Estimates hearing.

Another $1 billion in sales is forecast for the coming three years, taking the total projected sales under the Coalition government to more than $10 billion over its two terms in power. Overall, the state government's "asset recycling program" of selling off assets, supposedly to invest in new infrastructure, has resulted in government divestment of more than 20,000 properties, up to the last financial year.

With total NSW government property holdings estimated at about $140 billion, the Coalition's planned sell-off represents about 7% of the state's property assets.

The controversial sale of heritage-listed public housing at inner-city Millers Point has harvested nearly $450 million for the government so far, Budget Estimates heard. About 4000 properties owned by the Department of Family and Community Services have been sold, The Sydney Morning Herald reported on September 4.

The Coalition government has also sold 384 Department of Education properties since taking office. These properties were deemed "surplus to requirements”, despite reports the government is facing a $10.8 billion backlog in school maintenance and an explosion in student numbers.

Newman was unable to give any guarantee that the Education Department would not be forced to buy back some properties in the future — no doubt at inflated prices, benefitting those Liberal Party mates, the big property investors, who will have snapped up these properties for a song.

These huge sell-offs by the NSW Coalition government are only some of the most extreme cases of the sale of public assets by state and federal governments, whether Coalition or Labor, in recent times. Under Premier Gladys Berejiklian, the NSW government's privatisation mania, initiated under former Premier Mike Baird, has merely accelerated.

Asset recycling is merely a sham re-badging of the large-scale privatisation of public assets, which has been occurring in Australia and internationally for the past several decades, as part of the neoliberal capitalist drive that began in the 1980s. 

Asset recycling was launched by Prime Minister Tony Abbott in 2014, but ended by the Malcolm Turnbull government in 2016, with just half its allocation spent. Under the scheme, state governments were bribed to privatise public assets with an asset recycling subsidy from the federal treasury.

Even the Productivity Commission warned that asset recycling "could act to encourage privatisation in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits."

University of Queensland economist Professor John Quiggin, writing in the June 7 Guardian, described asset recycling as the "last gasp of a failed model".

"The core problem with the 'recycling' idea is that income-generating assets were sold to finance new investments that did not generate income. Rather like selling your house to buy an expensive car, this is a trick that can only be done once, and leaves governments with increased net debt.

"This end of asset recycling has been part of a broader reaction against privatisation and PPPs [Public Private Partnerships], which has swept a number of state governments from office," Quiggin wrote.

Unfortunately, this fate has yet to befall the corrupt and venal NSW Coalition government. However, with growing public opposition to the government's disastrous, soon-to-be-privatised WestConnex tollway scheme; the immoral sale of Millers Point public housing; the illogical looming sell-off and transfer of the Powerhouse Museum; and now allegations that the $12 billion Crown Lands estate is to be officially valued as a prelude to large-scale sell-offs, the tide may be turning on the Berejiklian regime.

Apparently, the US Trump Administration is interested in the Australian asset recycling experience. US Vice-President Mike Pence reportedly told business leaders during his visit to this country in April that the US is keen to emulate Australia's model of public asset recycling.

Meanwhile, taking advantage of his continuing links to the NSW government, former Premier Mike Baird, now a corporate officer with the National Australia Bank, visited the US in July to explain to government officials there how asset recycling is supposed to work.

"People are interested and have heard the story... the NSW story and the Australian story," Baird commented. Not the whole story, we can be sure.

The truth about the disaster arising from the experience of asset recycling, with the privatisation of community assets for the benefit of big business and the associated cuts to the public sector in the areas of housing, education, health and the environment, must be revealed and opposed.

Green Left Weekly has campaigned ceaselessly against the sell-off of public assets, and is pledged to continue to do so. We need your help to keep up this effort.

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