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Australia: the consequences of privatised infrastructure : Comments
By Tristan Ewins, published 7/8/2012Capitalism has an interest in opposing public private partnerships in Australia as they threaten its reputation.
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I agree that flat fees hit-low income households. The solution is to increase incomes so they can afford to pay for necessities, but charge them cost-reflective prices. This is why carbon tax revenues are being used to raise benefits and cut taxes.
Again, there’s a question of opportunity cost. Is the low-income earner better off with a high-quality public education and toll road, or mediocre “free” service in both. Given the disproportionate use of social infrastructure services (education, health etc.) by low income earners, it’s arguable that they are better off with government concentrating its spending efforts there.
Some WA examples of poor public utilities:
• The last organisations I know to accept payment of bills by phone were the water corporation and power companies – both government owned.
• Australia Post is the only business that is not open at my local shopping centre on Saturday.
• Massive improvements in services and productivity were achieved in the State’s rail freight sector when it was corporatized in the early 1990s. Employment was “slashed”, to use your term, but the industry needed it.
• The government subsidises and regulates public bus services, but private operators bid for the tender to supply the services. In my opinion, the service has improved since this was outsourced.
In some ways, WA is a counterfactual to your arguments because it has not privatised many utilities. Yet we have similar challenges to other states – rising energy and water costs, congestion on roads and overcrowding on public transport, unmet demand for public housing, a growing proportion of the budget eaten up by the health service …. This suggests to me that ownership is not the core issue.
Actually, I think competition and contestability are more significant than ownership in shaping a utility’s performance. For that reason, I share some of your concern about privatising monopolies, unless they can be regulated effectively. Telstra’s real prices to customers started to fall when it was exposed to competition (and noticeably at the time, only in those services where it faced competition).