By Sue Bull
Interest in the ALP's Hobart annual conference September 26-29 will centre largely on the privatisation debate — the selling off of publicly owned assets to big business. But many people are left wondering what the debate is about. It is worth looking back a little.
Most public services that we've inherited were not set up primarily in the interests of the public originally.
Take railways as an example. In Britain, at the time of the industrial revolution, railways were built as a fast, cheap method of transporting goods around the country, not to carry passengers. Later, when passenger services were developed, their main aim was to carry workers to their place of employment.
The same principle applied here. Melbourne's Upfield line ran to the Ford Motor Company factory.
The railway system was originally government owned and was used as both a direct subsidy to business and as a method of attracting and directing investment to particular areas. If governments had not done this, Australia would have found it very difficult to develop industry; from colonial times, the growth of Australian capitalism was dependent on government investment and activism.
While big business in the 1940s attacked the Chifley federal Labor government's plans to nationalise the banks (how far the ALP has come), they were not opposed to all government intervention or ownership. This was different from the laissez faire — private control at all costs — approach in the US. Here, government was expected to provide costly infrastructure like electricity, water and telephones, road and rail.
Business needs
The government-funded CSIRO was established at the behest of the Chamber of Manufactures. The manufacturers realised that if the government paid for costly research, business would be the major beneficiaries, which, of course, they have been. If you look closely at most public services, you find business interest doing rather well out of it.
A line is often drawn, however, when it comes to schools, hospitals and other social services. These areas find it increasingly more difficult to attract adequate funding. Hence the growing calls for "user pays".
This system worked reasonably well through the economic boom period of the 1950s and '60s. Governments paid for costly infrastructure projects, business invested, jobs were created, people paid taxes, and services were provided.
Those government services which ran at a loss were subsidised by the services that turned a profit. Governments could run rail lines to out-of-the-way places and subsidise these. Off peak travel costs are offset against the highly utilised peak hour city rail services. Post and electricity to rural Australia are likewise subsidised.
Both Labor and Liberal governments are still primarily concerned with creating an attractive investment climate for big business. Today, that means coaxing capital away from the money market into productive investment.
In a period of economic stagnation and recession, as we're experiencing now, business insists on buying into profitable sectors of public companies like Qantas, Telecom, the federal airports.
Privatisation serves the economic needs of business in a period when existing markets are saturated and with profit rates declining. Public utilities have already existing and often monopolised markets.
For Labor governments, the game is to convince the rest of us, and override the objections of those in their own ranks. They do this with some cunning.
Stealth
After depriving a government enterprise of sufficient resources to ensure its efficient operation, the government points to the enterprise's inefficiency. Over a period of time, the amount of cash needed to revitalise the enterprise becomes very substantial — "prohibitive", says the government; this money would have to come out of social welfare or another needy area, the public is told.
Selling off the enterprise may lead to lower taxes, we're advised (higher charges are never mentioned). Then privatisation is introduced through the back door, slowly at first. Businesses are corporatised and then "rationalised", with small sections being sold off or contracted out. Eventually, it's Qantas, the Federal Airports Corporation, Telecom as a whole that are put on the market.
With privatisation come reduced working conditions and huge job destruction — witness the process in the state and Commonwealth public service, Telecom or Australia Post. Services are reduced or cut out altogether; only that which turns a profit to the shareholders is kept, or the company demands a direct subsidy from government to maintain non-profitable services. Costs for these services often increase dramatically. When British Telecom was privatised in 1984, charges were raised and profits soared.
The sole interest of business is to make a profit from these assets; providing a service to the public is only the means to the profitable end.
Similar things happen here. Private bus lines in the western suburbs of Sydney have no competitors, so they charge what they can get away with. They close unprofitable routes and pay their staff less than the government bus company rates.
The argument that private enterprise is more efficient and cost effective does not stand scrutiny. For instance, in the US more is spent per capita on health than in any other country — 12% of GDP — yet the private health system is appalling and 100 million of its citizens have inadequate coverage. In Australia, 8% of GDP is spent on health care for a far higher quality service (although this quality is under continual pressure).
Free enterprise competition doesn't usually enter the debate because many of the privatised industries enjoy a monopoly position.
Social decay
The social decay in Britain and the US is not so far away from us here. Sydney's western suburbs experience a health system starved of funds and unable to meet demand; schools are bursting at the seems, with social problems they're unable to stem; a community sector exists which barely scratches the surface of human need; the public housing system is on the verge of collapse; public transport is inadequate; and unemployment never dips below double digits. The social problems and violence caused by this environment are immense and getting worse. Sydney's western suburbs are mirrored in every major Australian city.
Will privatisation make this situation better or worse? Overseas experience proves the latter. While the public sector is far from perfect, it needs to be defended. In fact, we need an expanded public sector. Airports and airlines can be run safely, with due respect to the environment and as a public service — and still earn a profit.
Profits derived from these enterprises and others like Telecom should be returned to the public purse to be used for human need, rather than to the pockets of the already wealthy minority. The privatisation debate is not just about abstract principle, but about equity and social justice.