By Liam Mitchell
ADELAIDE — In a cynical election gimmick, the federal government has made the South Australian state Labor government an offer of financial assistance if the state government sells off part of the debt-ridden State Bank.
Keating had already twice refused to grant federal assistance to overcome the state government's financial problems, caused by debts incurred by the bank. The first time was in January 1991, just before Premier John Bannon announced the first of a number of bail-outs of the bank, that time amounting to $970 million.
The second request from the state government, prior to the 1992 state budget, was again refused by Keating. The financial troubles of the bank have cost the state government $3.15 billion.
The federal package would involve wiping $600 million off the state's debts — which total about $8.25 billion, approximately 30% of state GDP — as assistance in selling the bank.
The actual details of the bank sale would be left up to the state government to work out.
The government has already split the bank into two sections — the profitable public side and the financial, speculative side, which incurred the debt in the first place.
Melanie Sjoberg, Democratic Socialist candidate for the seat of Hindmarsh, told Green Left Weekly, "Selling the bank is just a quick fix way of coming up with some money to pay off the debt incurred, not by the people, but by financing speculative bids by private companies on real estate.
"This means that the government will be selling an institution owned and supposedly controlled by the government, in the interests of the people, so as to cover up for the costs of its own mistakes."
It is not yet clear whether the government will sell just the profitable side of the bank, or the entire institution at a reduced price. Either way, SA taxpayers will have lost what was once an important source of income for the state government.
"The people who should pay for the debacle with the State Bank are those sections that benefited from its financing of the speculative market — that is, big business", said Sjoberg.
"Instead what is happening is that business is actually getting the chance to purchase a profitable area of government revenue, taking that income away from the people."
There is also reason to fear that the sale of the bank will sooner or later bring a loss of jobs. Privatisation of public assets typically s purchasers go all out to make a quick profit on their purchase.
Making the State Bank debacle an election issue of course only makes it more difficult to reach a solution that protects the public interest. The Coalition had earlier promised $400 million over 10 years to help the bail-out. An election "auction" focusing on the total figure will only help to conceal who ends up benefiting.