By Peter Boyle
MELBOURNE — State opposition leader Jeff Kennett never seems to know when to shut up. Revelations of dubious transactions conducted by the Kirner government to raise some ready cash prompted "foot-in-mouth" Kennett to threaten not to deal with businesses which entered into "immoral and amoral" transactions with the government, if he becomes premier after the next elections.
The problem for Kennett is that most of the biggest businesses in the state have been doing such deals. By exposing the Kirner government's asset sales, debt restructuring and creeping privatisation, Kennett has shown that big businesses stand to gain millions — perhaps billions.
Last June, Kirner promised to sell $400 million of assets, but the recession has made buyers hard to find. To encourage buyers, the government is prepared to lease back nine city buildings for at least 10 years, if anyone is prepared to buy them at today's bargain basement prices.
There is a $200 million deal with Jennings to build 15 new police stations and lease them back to the government. Other lease-back arrangements include most of the Public Transport Corporations's rolling stock (some of which is leased back only to be kept in storage, because there are more trams than needed).
According to Joan Doyle of the People's Committee for Melbourne, an anti-privatisation lobby group, most lease-back arrangements result in the government paying more over the long term than it would have if it had retained ownership and paid interest on the corresponding debts. There are probably other incentives for big businesses in these and the millions of dollars' worth of planned joint venture infrastructure projects like the docklands, the casino, the rapid transit link to the airport and several freeway extension projects, she told Green Left.
There are a number of smaller privatisations which also do little for the public while offering lucrative gains for private investors. The Victorian Health Department approved the privatisation of public hospitals' outpatient clinics on May 10. This could mean up-front charges for outpatient treatment in hospital. Further, this arrangement encourages the public hospitals to feed patients to their new "tenants".
The profitable Transport Accident Commission (which has the monopoly in Victoria on insurance for motor injuries and had a $1025 million income last year) may be partly privatised. The state government could get up to $330 million for the sale of shares, but private investors will hope to take advantage of what has proven to be a profitable business.
The biggest potential privatisations are the electricity, gas, and water and sewerage utilities. Kirner says they are only being corporatised, not privatised, but the next Liberal-National government is committed to their privatisation. Part of the corporatisation involves a special debt arrangement which could be a $6 billion dollar gift to privatisers.
As part of Kirner's corporatisation plan, the state government would take on $4-6 billion of the utilities' $13 billion in debts. The government argues that freeing the utilities of part of their debt will allow them to act on a more commercial basis. But if this deal goes through, future new owners of the utilities will get properties that much more valuable.