Repelling the privateers

Wednesday, August 10, 1994

Repelling the privateers

By Dick Nichols

"Are you for or against efficiency and competitiveness?" That's the question the pro-privatisation crowd, from the federal Labor cabinet to the Institute of Public Affairs, fire at every supporter of public enterprise and the public sector.

If you answer yes, they can haul out a skip-load of economic reports that "prove" that private = more competitive = cheaper and more efficient.

If you say no, it just confirms what they've already been telling everyone — that you're really defending overstaffing on the wharves, drones in government departments and dozy public sector management.

How to answer their gambit? First ask the privateers exactly what they mean by "efficiency". For example, was it "efficient" to remove conductors from Sydney buses with the result that two school children could be trapped in the centre door and dragged to their death?

Or again, did the windfall gains to the new shareholders in privatised British energy utilities outweigh the loss to people on social welfare forced onto a user-pays system?

Here we stumble on the problem of the way the "privatisation debate" is conventionally conducted. First, the results of all the official reports depend critically upon the assumptions used to evaluate public assets and their social benefit. More importantly, the conventional talk about a "net gain (or loss) for society" simply evades the uncomfortable fact that society is divided into classes — those who can easily afford an increase in their taxes to fund viable public sector services and those who are living below the poverty line.

It's not surprising, then, that even an uprightly orthodox economist like UNSW's David Clark has to concede that "unfortunately there is no simple piece of economic theory, cost-benefit analysis or fancy econometric model which can provide definitive answers to the 'who benefits-who gains' key questions about privatisation" (Financial Review, August 3).

Secondly, where the public sector is obviously delivering a bad service at a higher cost than potential private suppliers, we can suggest that this may not be due to its being public but to other factors. These typically include:

  • Deliberate government policy of using public sector utilities as a milch-cow to help reduce their budget deficits (as with the NSW Water Board).

  • Deliberate refusal to modernise capital equipment. As workers are forced to produce with increasingly ancient machinery it becomes a breeze to "prove" that private could do better as the Wran-Unsworth and Greiner-Fahey governments did against the NSW railway workshops.

  • No role for the workers in running public services. Most public sector workers can list a mile of inefficiencies, stupid practices and pointless duplications in their workplace. But what gain is there in being a whistle blower when, given the present order of things, any exposé will be usually exploited by the powers-that-be against public sector workers themselves?

Privatisation won't solve these (and other) problems of the public sector. This "cure" is worse than the disease. We need instead to revive our public assets through a program of upgrading and modernisation under the democratic control of workers and consumers. Most importantly, since it will also be impossible to implement a serious program of job creation and environmental repair without a revived public sector, existing public enterprises, warts and all, must be defended by any means necessary.

[Dick Nichols in the Trade Union Coordinator of the Democratic Socialist Party and a co-editor of Solidarity.]