By Margaret Allum
Between 1850 and 1914, the main infrastructure projects in Australia were state-owned and controlled. These included the railways and the water, electricity, telephone and sewerage systems. At federation, state governments owned around half of Australia's fixed capital (not including land).
Until the end of World War II, much of this infrastructure remained in state hands. This did not mean that private capital did not have a firm grip on the Australian economy, rather — as most of public enterprises were far from profitable — the capitalists were happy to see the state carry the burden.
In the post-war capitalist boom, the resources were available to governments to develop the public sector and welfare institutions. Increased social services resulted from the struggles of the organised working class.
High profit margins and a buoyant economy allowed capitalist governments to grant concessions and thereby buy relative social peace. The 1970s and early 1980s saw the public sector in Australia reach its peak.
In the 1980s, austerity began to be imposed by governments during the deep economic recession in Australia and around the globe. There were cutbacks in social spending, a shrinking of the public sector and the privatisation of state assets and services, many of which had become potentially highly profitable.
Privatisation is not an economic imperative for efficient and effective service provision. A public monopoly, provided it is run by a board representing the workers and the consumers and has access to the latest technology, can achieve this.
Many state enterprises slated for privatisation have not been allowed to utilise the latest technology, and are run down until they are inefficient. This provides the excuse for the private sector to step in and take over. Eveleigh railway yard in Sydney, for example, was full of unused, state of the art equipment when it was privatised by the NSW government.
Also singled out for privatisation are the highly profitable utilities like Telstra, which is a huge generator of revenue for the federal government. Vast sums of revenue were stolen out of the public purse as each chunk was sold or outsourced.
Public enterprises have been "corporatised" to increase profitability through job cuts and the introduction of other "efficiencies". All to make them an attractive buy.
The privatisation of state-run services is not just a quick way plug a few holes in government budgets, although it often serves that purpose and is sold to the population on that basis.
Privatisation is an organised political project relating to a particular phase of the capitalist economy. It involves a transfer of wealth, or potential wealth, from state to private ownership.
This process does not just involve selling state assets directly to private industry. State and federal governments are also contracting out services, removing government regulations and introducing user pays.
Some previously state-run services, especially social services, are simply being abandoned, leaving families (usually women), charities and volunteers to pick up the pieces.
Under capitalism, state-run enterprises have been able to function reasonably well only in the particular circumstances that have been useful for the ruling class. Inefficient government-owned services are not inevitable, but are the result of deliberate policy.
Public services should not be run to make a profit but to provide needed services. They must also be democratically controlled by those who utilise them. That may sound obvious, but this is not how things work in capitalist Australia. The driving force behind the provision of goods and services, in both the public and private sectors, is the reduction of costs and increasing of profits.
The only way to assure human and natural resources are used most rationally to benefit society is to take production out of private hands and placed under the control of the working people and consumers, by way of popular democratic decision making.