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The Forum > Article Comments > Privatise and make government honest > Comments

Privatise and make government honest : Comments

By David Leyonhjelm, published 31/3/2015

When electricity networks are privatised, as they were in Victoria, the new, profit-oriented owners tend to constrain their labour costs, much to the annoyance of their unionised workforce.

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So in the end what your saying David, is. Companies lowering wages and raising prices is a good thing.
Posted by Cobber the hound, Tuesday, 31 March 2015 8:16:26 AM
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Not only that Cobber, but he seems to be also saying reducing essential maintenance (money saving) to the point where poles fall over and start impossible to stop wildfires, with huge loss of PRIVATE PROPERTY AND LIFE; is also a good thing!

You just can't check white anting from the air! But you can have a nice joy ride in a very expensive piece of equipment, and write off lots of tax!

Perhaps he thinks the budget bottom line could be a lot slimmer?

And given the privatization often results in foreign ownership?

Repatriate all the price gouged profits and most of the tax liability!?

A good thing also?

And it's not just the domestic market smarting under the new electricity charges but business as well, who must respond by raising prices; which all too often results in huge wage breakouts across the board, given just how much increased energy prices impact on the overall cost of living!

And London to a brick he was one of those pollies that waffled on about how dreadful the carbon tax was?

Unless you're getting a generous expense account, which isolate you from the consequences of downright dumb government decisions!?

And seriously increased brown outs and blackouts, many with huge commercial consequences as thawing food goes bad/is lost or causes multiple food poisoning outbreaks, another good thing!?

And the price increases that automatically follow privatization is a double blow, but particularly for assembly line business, which is totally dependent on power, like say GM in SA, which under a privatized model, now has the highest power prices in OZ!? Another good thing?

Even as Holden packs up and prepares to exit these shores!

Why? Well a much larger power bill, may well have been the final nail in that coffin!

But that's probably okay as well, given David's job or generous after politics pensions aren't threatened by any amount of privatization?

But his personal investment portfolio, may be seriously fattened by it? And via a captive market!?

Well, that would be a good thing wouldn't it?
Rhrosty.
Posted by Rhrosty, Tuesday, 31 March 2015 9:01:57 AM
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David, your antiABC rant is ridiculous! Decline in advertising revenue is the thing that's causing the hollowing out the rest of the news industry. If we didn't have the ABC we'd be even worse informed than we are now.

And what is the source of your claim that " a majority of Australians never watch or listen to the ABC"?

And on your main issue, the case for privatising monopolies iv very far from straightforward. Firstly there's the value argument; do you doubt the government would now be financially better off if it hadn't privatised Sydney Airport?

Secondly, the owners exploit the way the regulation works. Victoria's new electricity infrastructure has been "gold plated" so that the owners can charge the customers more.

Thirdly, some of the staff cuts can be false economies. There's a greater risk now of Victoria's electricity infrastructure sparking bushfires. And the benefits of the staff cuts don't seem to have been passed on to consumers.

Fourthly it's just not true that "Government-run businesses are never run as well as private businesses." The most you can say is that they're NOT ON AVERAGE as well run as private businesses. But there have been some well run government businesses and some very badly run private ones. The privatisation of Britain's railways is a particularly conspicuous example.

And finally, the need to provide essential services puts taxpayers at risk EVEN WHEN THEY'RE PRIVATIZED. If the company operating them goes bust, the government will have to step in. And when they do, they're likely to find that the wealth of the company has already been transferred to the shareholders but the liabilities remain.
Posted by Aidan, Tuesday, 31 March 2015 9:21:04 AM
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Public bureaucrats are difficult to deal with, "Private" bureaucrats are impossible!
Posted by lockhartlofty, Tuesday, 31 March 2015 9:52:36 AM
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There do seem to be a lot of claims made in the article with no attempt to substantiate those claims. Whilst this is an opinion site the claims mostly seemed to be presented as established facts. Some references to sources would be useful.

I went looking to see what I could find regarding the electricity network price issue. The best coverage I've found was from the ABC http://www.abc.net.au/news/2015-03-25/fact-check-does-privatisation-increase-electricity-prices3f/6329316 also some interesting material at https://www.nsw.gov.au/sites/default/files/miscellaneous/electricity_network_services.pdf

A worthwhile point to take from the latter is the different cycles of network investment between states.
"For example, over some of this period, the networks in NSW and Queensland have invested particularly heavily in their networks.
In contrast, the businesses in Victoria are approaching a stage in their life cycle which may require substantial further investment. South Australia may also have recently entered a similar stage in their investment life cycle as is the case in Victoria."

Also worth noting from the second report the disparity in non-network cost rises.

There is also some interesting material at http://www.rba.gov.au/foi/disclosure-log/pdf/101115.pdf entitled "HOW ARE ELECTRICITY PRICES SET IN AUSTRALIA?" Appendix 1: Input Costs summarises input costs for Energex on Network Capital Expenditure. There are also some interesting comments on Victorian actual spending and submissions for expected spending.

My overall impression is that the way David tries to portray this issue with his claims is not backed by evidence.

R0bert
Posted by R0bert, Tuesday, 31 March 2015 10:12:23 AM
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You don't have to lower wages to cut costs. You just have to cut out all the dead wood. Look at what happened in the Latrobe Valley when the SEC was privatised. A big percentage of the redundant work force disappeared. We are still not paying a lot. My last bill was 20.7 cents per KWH for the power used.

David
Posted by VK3AUU, Tuesday, 31 March 2015 10:14:20 AM
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