The disaster of privatisation

Rail, Tram and Bus union members protest against plans to privatise Sydney Buses, November last year.
December 2, 2017

The publication of NSW Greens Senator Lee Rhiannon’s new pamphlet, Sold off, sold out: the disaster of privatisation and how to reclaim our common wealth, is timely.

With the federal government now supporting a royal commission into the banks and widespread controversy over national energy policy, the damaging consequences of privatising many of the country’s formerly publicly owned industries is clear for all to see.

The crimes and misdeeds of the Four Big banks has become so politically hot their CEOs have decided it is better to have a royal commission than not. Despite warnings from former Prime Minister John Howard that any such inquiry would be “rank socialism”, they and the embattled Prime Minister Malcolm Turnbull have decided it is the least worst option.

The biggest bank is the formerly government-owned Commonwealth Bank of Australia (CBA). It was sold to private investors by the Labor government in the 1990s for a song and made a profit this financial year of about $10 billion.

This brings the question of the privatisation crusade, which has gripped Australia and the Western world for several decades, into stark relief.

Organised robbery

The era of neoliberal capitalism began in the 1980s under US President Ronald Reagan, British Prime Minister Margaret Thatcher and the Labor governments of Bob Hawke and Paul Keating.

The privatisation of key public assets is effectively robbing people of their property wholesale, and handing it over at bargain prices to big business and the wealthy. This process has been an important factor in the growing inequality gap between the plutocrats and the majority of society.

This grand theft of public property is arguably the greatest organised robbery of the common wealth in human history. In Australia, the sell-off of our assets, built up over decades of class struggle and political campaigning by the labour movement during the 20th century, is now reaching a critical point.

No public sector facility or service is exempt from outsourcing, contracting or outright sale to the private corporations.

Unions and community organisations have fought against privatisation, often successfully, over recent years. When the truth about the negative effects of privatisation is exposed, it usually proves highly unpopular — sometimes bringing down governments in the process.

We need to not only to demand an end to all future sales of public assets and services, but to call for the nationalisation (or renationalisation) of major industries, under workers’ and community control.

That’s where Rhiannon’s new pamphlet comes in. It provides a highly readable and educational expose of the catastrophe that is the recent history of privatisation in Australia. With its focus on NSW, it gives new insight into the potential for a fight back.

Rhiannon writes: “For the public, there is no upside. They have been robbed in multiple ways by privatisations: assets are frequently sold below their true value; the sell-off is followed by higher prices and charges; profits boom, but services are downgraded; corruption emerges; there is a significant loss of earnings flowing in treasuries; there are inevitably job losses; wages and conditions for surviving employees are reduced; regional communities are the worst hit; economic health and quality of life suffer; vital investment does not occur; and, democratic control of the economy is diminished.”

Specifically, since 2011, the NSW Coalition government has sold more than $62 billion in public assets.

It is either privatising or preparing to privatise public buses and trains, hospitals, public housing, prisons, the land titles registry, state forests and crown lands.

Other privatisations are being investigated by the secret Commissioning and Contestability Unit, whose mission is “to introduce private ownership and private provision into as many government activities as possible”.

“To cap it all, under a federal Liberal National government scheme, state governments have been handsomely rewarded from tax-payer funds for selling off our public assets — to the tune of 15% of the sale or lease price,” Rhiannon states.

Case studies

In a series of illuminating case studies, Rhiannon examines the damage to the public interest that successive privatisations in NSW have caused.

In the first example, entitled “Energy — Privatisation’s biggest disaster?” she notes: “No sector of the economy has been more privatised than electricity. It has gone further in Australia than in the UK, European Union and the United States.

“The privatisation of electricity has meant escalating (and continuing) price rises — at three times the rate of CPI increases; loss of significant income — for the NSW Treasury more than $2 billion a year; barriers to the switch to renewable energy; drastic reductions in the number of frontline staff; a drop in productivity as managers and sales staff proliferated; market manipulation as ownership is concentrated in fewer firms; and the appearance of 'energy poverty' among lower income households.

“The solution to the energy mess lies ... in renationalisation of the energy grid. ... The privatisation experiment in electricity has failed. It is time to return to public ownership.”

In the chapter “Housing — a social right, not an investment rort” Rhiannon states: “There is no worse market failure in Australia today than housing. ... Not content with this system rigged against even middle-income home-buyers, the Coalition government in NSW is liquidating housing estates.”

The Australian Greens advocate the establishment of an Australian Housing Trust, funded by raising special government bonds. The aim of the trust would be “to make housing a right rather than a commodity priced out of reach for too many people”.

In addition to a massive expansion of public housing, renters’ rights would be protected with laws to guarantee secure leases and limits to rental increases.

The section “Public transport privatisation — a slow moving train (and bus) wreck” details the recent history of the sale of public ferries, trains and buses in NSW. It concludes with the statement that: “The renationalisation of public transport must be on the timetable here too.”

After covering the privatisation of prisons, hospitals and education, Rhiannon says: “Privatisation, by introducing the profit motive, the market and ability to pay, undermines [the right to healthcare]. Moreover, privatisation of public hospitals have regularly failed.

“In fact, seven privatised hospitals have failed nationally — invariably at great cost to the public. It is this lesson that the NSW government, blinded by ideology and in bed with private hospital operators, wants to ignore.”

On the gradual privatisation of the education system, the pamphlet proposes that education needs to be renationalised. We need “higher education funding for our public schools, TAFE colleges and universities — and an end to the attempt to make education into a market”, it says.

The final example provided is Private Public Partnerships, which is described as “a cash cow for private investors”.

Under PPPs, governments sign contracts with private corporations for the latter to build and operate essential services. They are essentially a mechanism for handing over public assets to big business.

Nationalisation

In an afterword, former NSW Greens co-convenor Hall Greenland argues for “some steps towards [re]nationalisation”. He notes the revival of socialist proposals by US presidential candidate Bernie Sanders and British Labour leader Jeremy Corbyn.

“In Jeremy Corbyn's case, this included the idea of nationalisation, or more precisely re-nationalisation, the taking of essential services back into public ownership. He went into the recent British elections promising to nationalise the railways, electricity and water and the Royal Mail.

“Given the manifest failures of privatisation, it is scarcely surprising renationalisation has proved a winner electorally. These failures add immediacy to the classic case in favour of public ownership of those industries that are either natural monopolies or essential to social wellbeing and social justice.

“[W]hatever the challenges and difficulties facing assertion of democratic control over our economy, they should not deter us from attempting what ecological sustainability and social justice demand.”

Rhiannon’s pamphlet is essential reading for those wanting to join in the fight against privatisation and for the nationalisation of major industries as an important step toward a socialist future.

[Sold off, sold out: the disaster of privatisation and how to reclaim our common wealth is published by The Greens and is available free from Senator Rhiannon’s office.]

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