Keating's privatisation push threatens jobs and environment
When Prime Minister Paul Keating met with state premiers in the Council of Australian Governments (COAG) meeting on August 19 they claimed to be discussing a new national competition policy. But what really was up for discussion was the size of the federal government's bribe to states to privatise their electricity, gas and water utilities.
These are the most profitable of the state-owned utilities. Selling them off will cut into state revenues, so the state governments were demanding a $5 billion compensation. The Keating Labor government was reluctant to pay this much and the meeting agreed to continue negotiations for six months.
While the COAG parties could not agree on the size of the bribe, they all agreed on the privatisation objective. Indeed state governments, Liberal, National and Labor, are all well down the track in preparing the privatisation of these utilities. In the course of this preparation — dubbed "corporatisation" — thousands of jobs have been slashed (5000 jobs have been shed by Victoria's water utilities since 1988), charges to ordinary consumers has risen and profit-making has been given top priority.
The consequences for the environment of the corporatisation, and next privatisation, of energy and water supply utilities are obvious. If these services are run for profit and placed in the hands of private profit-makers, the environment is bound to suffer. This has certainly been the case in Britain where water, sewerage, energy and telecommunications utilities were privatised under Thatcher. Currently there is a movement to save beaches and several coastal towns from pollution by private sewerage contractors.
With an eye to the horrible social and environmental costs of the privatisation of these utilities in Britain, Australian privatisers have tried to disguise their push as a drive for greater competition. Professor Fred Hilmer of the University of NSW was commissioned by the Keating government to head a National Competition Policy Review, which was completed last year. The Hilmer report only briefly discusses privatisation, but strongly advocated the "reform" of existing state monopolies. It also recommended that a national council be set up to safeguard competition, that the Trade Practices Act be extended to cover the professions and government trading bodies and that all regulations that restrict competition be reviewed.
To add to the smokescreen, the Economic Planning Advisory Council (the federal government's department to push economic rationalism) produced a dubious computer model estimate that the implementation of the Hilmer report's micro-economic reform proposals would increase gross domestic product by $22-24 billion by the year 2001.
But at COAG, the state governments were not interested in most of Hilmer's recommendations to enforce competition, though they said they would be prepared to privatise their utilities for a big enough compensation from Canberra. This is no surprise because privatisation does not ensure competition, rather the opposite. In the private sector, the trend is always to circumvent competition through greater monopolisation and through economic partnerships, alliances and joint supply and marketing strategies.