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How decades of privatisation have impoverished NSW

How decades of privatisation have impoverished NSW
by James Sinnamon

A short article in The Australian Financial Review of 24 September 2008 leaves the reader wondering what exactly was the point of NSW's extensive program of privatisations going back to the 1980's.

The article, "Bits and pieces won't fetch $1 billion" by Tracey Ong purports to show what options are available to the NSW government in its planned mini-budget to cover the claimed $1 billion-plus shortfall in its budget.

The article states, "The problem for Mr Rees is that the once-rich government asset portfolio has been depleted after two decades of reform." This 'reform' left, according to the article, apart from the electricity assets, the sale of which is now politically impossible, "only a handful of assets... worth offloading."

This surely begs a question from those who have held out privatisation to us as the panacea for all of our economic ills: Exactly what of enduring benefit has been achieved by past waves of privatisation?

Two of the principle justifications given for privatisation have been:

1. It would free up government money in order that it could be spent on 'core' government responsibilities; and

2. It would make the whole economy run more efficiently.

So what then happened to all the money 'freed up' from past privatisations? Why is it, as we are told, that NSW faces a financial crisis? If privatisation is supposed to make economies run more efficiently, how is it that NSW's economy has contracted?

The article lists the "prize assets" already sold: "TAB, State Bank and the Government Insurance Office (GIO)". Other assets that the article failed to mention are the Government Printing Office Printing, the Homebush abattoir and the State brickworks, privatised by Greiner and FreightCorp privatised by Carr in 2002. In addition, large numbers of government buildings, housing stock and land were sold off, beginning from the time of the Wran Labor Government. That process was accelerated by the Greiner Liberal Government which came to power in 1988.

Much of NSW's roads have also been privatised and turned into toll-ways since the time of Unsworth under the different guise of "Public Private Partnerships", including the infamous Cross-City Tunnel that Carr inflicted upon the Sydney public.

This all begs further questions: How much longer can the process of privatisation continue, and what should the NSW government do to balance its budget once all the remaining assets are gone?

Typically, the article only proposes further privatisation to solve NSW's financial crisis. Other possible measures such as raising loans or obtaining additional revenue are not even contemplated.

Ong gives a list of assets which she tells us could be sold off immediately:



Operating Revenue

Forests NSW



Sydney Ferries



WSN Environmental Solutions



State Lotteries



Others ruled out as politically too difficult include: Ports, Landcom, the four water corporations and, of course, electricity.

The article points out, even if any of the assets were sold, they would be sold at fire sale prices.

Canadian Ronald Wright in A short history of progress (2004) wrote of economic neo-liberalism which demands privatisation of publicly owned assets:

After the Second World War, a consensus emerged to deal with the roots of violence by creating international institutions and democratically managed forms of capitalism based on Keynesian economics and America's New Deal. This policy, although far from perfect, succeeded in Europe, Japan and some parts of the Third World. ...

To undermine that post-war consensus and return to archaic political patterns is to walk back into the bloody past. Yet that is exactly what the New Right has achieved since the late 1970s, rewrapping the old ideas as new and using them to transfer the levers of power from elected governments to unelected corporations -- a project sold as 'tax-cutting' and 'deregulation' by the Right's courtiers in the media, ... The conceit of laissez-faire economics -- that if you let the horses guzzle enough oats, something will go through for the sparrows -- has been tried many times, leaving ruin and social wreckage. (pp126-127)

NSW's record seems to confirm that privatisation is, indeed, just old-fashioned plunder as practised by the Conquistadores, Vikings, Mongols, etc. Revenue generating assets paid for over previous decades by taxpayers have apparently been sold off for no better reason than to line the pockets of private investors, bankers and stockbrokers.

The rightful owners of these assets are the public of NSW, who have paid for them through taxes and hefty bills, and no Government has the right to "offload" these assets without their informed consent. Whenever they have been consulted they have rejected it overwhelmingly. This, and not the failure to get the Labor Party's support, as the article implies, is the principle reason why electricity privatisation was stopped.

Whilst it is true that "domestic and overseas players lining up to get a slice of the action" were disappointed, given the harm already done to NSW by these parasites the NSW public surely owes them no more favours.

To the extent that the alleged NSW financial crisis (as opposed to the global financial crisis) is real it should be fixed by the raising of loans or by finding other fair and equitable means to raise revenue. It should not be "fixed" by selling off yet more family silver.

This article was originally posted on 20 Sep 2008 . It was revised on 1 Oct with the help of Sheila Newman, editor of The Final Energy Crisis (2nd edition).

See also: "Media contempt for facts in NSW electricity privatisation debate" of 19 Sep 08.


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Why are News Ltd propagandists given air time on the ABC?

(This comment was posted to ABC Radio National's National Interest guest book and to candobetter.org in response to an interview with Dr David Burchill concerning NSW state politics.)

What a shallow analysis of NSW politics by Dr David Burchill that was!

I guess it should have been no great surprise to me to learn that he was regular columnist for that shameless propaganda arm of the New World Order, namely Rupert Murdoch's Australian newspaper. (To get some idea of just how appallingly the Australian misreported the NSW electricity privatisation issue, read Media contempt for facts in NSW electricity privatisation debate of 18 Sep 08.)

Burchill blames the NSW Labor Party administration and the union movement for the trouble that the NSW government got into when it attempted to privatise electricity.

What about the NSW public, who were never informed by Costa and Iemma of their plans to privatise electricity in the 2007 elections, and who explicitly rejected privatisation in the 1999 elections and who, throughout all the many months of the recent conflict over privatisation remained 79%-86% opposed to privatisation in the face of media misinformation and taxpayer-funded pro-privatisation propaganda?

What an appalling outrage against democracy that was!

Thank goodness that the NSW Labor Party administration and the NSW union movement, for all of their faults, together with the Greens, Independents, and NSW state Liberals and Nationals, stood up to Iemma, Costa and the NSW corporate sector.

I urge the ABC to make use of proper commentators and analysts and to reduce its reliance upon those on Rupert Murdoch's payroll - David Burchill, Greg Sheridan, Paul Kelly and Phillip Adams to name only a few.

Yes Eliot, China....changing just the Mao part a bit

That's right Eliot,. A Totalitarian Economic superpower.

So ...........................your point? Something to celebrate?


It's the same world wide

Isn't it the same for every society privatised and turned over to what they call the free market, but is really an anti competitive elitist market. Look at any state in Aus, they have nothing left but rusty and collapsing infrastructure and failed services.

The stupidity of all this privatisation is it can't work, as profit growth doesn't mean service but rationalisation which strips services, maintenance and upgrades to maximise profit growth. It sounded stupid to me when they praised it and the outcomes are stupid.

As for China, they haven't privatised at all, just relaxed state ownership of certain industries and commodity providers. But they are on the way out as well, as their credibility to provide safe commodities has gone out the window and many forget, transporting all those goods is only going to get dearer and more unreliable as shipping industry costs sky rocket. Don't forget their society is probably one of the most degraded and polluted in the world, so is bound to collapse very soon.

Expert not red

Didn't China's move to privatisation turn it from an impoverished Maoist basket case to a sort-of economic superpower?

bonfire of the vanities.

Yes, privatisation has ben another aspect of the malign unity that is neoliberalism; the universal trashing of assets and expectations valorised to the point that selling off profitable infrastructure becomes a virtue for its own sake rather than relative to any benefit or injury done the polity.

Such is the disconnect from reality that epitomises this ideology, that denies human nature and reality, through the rigid avoidance of questioning of its own metaphysical asumptions.

Don't agree Michael de Angelos

I'll comment on this thread more fully laterr but I just had to reply now.

You are wrong about Admiral Collins, Michael de Angelos.  He is nowhere near as intelligent as you give him credit for. 

In fact, when he stood for Lord Mayor the time before last, he got fewer primary votes than I did in the previous State Election.

He is mindnumbingly stupid.

In a public debate some years ago, he was commenting that he had been out with a girl when he was young but that "She became a Nun." 

"That worked then,"  I interjected to considerable laughter from the audience. 

Don't tell me!

I once had a conversation with then Leader of the NSW Opposition Peter Collins who told me how much he admired Thatcher's, John Major's and then Tony Blair's privatisation of UK state assets.

I said in my most polite manner: "you are a f**wit" and walked away.

In Britain privatisation has been one of unmitigated disaster with state assets (ie: owned by generations of taxpayers) sold off for bargain prices to dodgy and incompetant management on the decidely dodgy claim that private corporations can do it better (proved time and time again to be one of the Great Lies) who then slash and burn, award themselves huge bonuses while those former assets - hospitals, railways - completely collapse, or in the railways have horrendous accidents in which dozens die because of bad maintenance - and are then resubsidised by the taxpayer with bail-outs.

So the taxpayer has his own asset sold off and then is forced to refinance what he now doesn't own.

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