<. Turn it over to proper custodians of capital who are accountable to shareholders and you'll probably get a better company. By "better" we mean a company that turns a profit because it delivers more efficient services to its customers. That's also a company that can employ people and deliver returns to shareholders too.>

Whose leg are you trying to pull?

Sure there are some companies run well, however just look at what happened in Victoria over the privatisation of power. For years, the number crunchers cut back on things like routine maintance, now after about 2 decades of neglect in the name of profit and shareholder returns, the taxpayer is being held hostage to paying for networks that the private sector should be paying for.

An insider told me that the big gas explosion that shut down gas supplies in victoria was a direct result of cost cutting on routine maintance, simply because the share dividend is number one.

Once the Robber Barons were royalty, now they are the CEO's who hold the public hostage.

Just look at the death of a thousand cuts that was experienced by Ansett.

If I recall correctly the privatisation of rail in the UK was celebrated, then years later, the system started to fail because of cost cutting and lack or routine maintance.

Victoria's rail network is operated by the private sector, yet again because of lack of routine maintance and other cost cutting measures the system fails .

James well said.

I'm not so confident that manager running a company with an eye to their own short term performance pays based on short term returns are any better just because the company is owned by shareholders rather than by the people of a state (or nation). The promised benefits to the previous owners resulting from the sell off of a variety of assets don't seem to have arrived. Massively increased prices do seem to have been the main outcome.

These won't be companies built up from a family business run by the founders and managed with vision.

There may be some good reasons why they will be profitable but it's unlikely that those who currently own the assets will benefit from it (unless they decide to take up the exciting opportunity to buy a stake in what they already own).

R0bert

Yeah, all profits are good...even if they go offshore and there is no competition to force efficiency.
As previous posters say, the Victorian experience of privatisations is just duplication, mass brainless marketing and no investment without "user pays". Profiteering would be a better term than profits as the organisation ends up with less capacity to expand, and capital is bled off to maintain short term shareholder ROI.
Whilst I read "Money Morning" and appreciate the contrarian views of Dan and his co-workers, they do bang on about "evil government" too much. A large part of Australia's resilience to the GFC came about due to our high employment which in turn comes from our democratic socialist policies of prior decades. Thankfully we are yet to commit fully to the US style "tooth and claw, endless profits" economy which we *know* is strategically weak.
Natural monopolies that can be funded with cheap government debt *are* superior to private expensive capital with profit taking at all points. Quite simply, jobs for citizens are more important than profits of investors. (Qualified economists know that maximum utility is achieved through minimising profit; not investment, or spending, but profit.)
The system that is *supposed* to pool savings to produce investment funding, "Banks" have themselves become profiteering entities instead of economic infrastructure. The super low artificial interest rates that effectively discourage saving and encourage risky investment forces the rest of the economy to grow unsustainably, or suffer a lack of investment due to low profits, as most public services tend to do.
Australia's hugely profitable banks are vast adult daycare centres where silly wages are paid to folks who create work for one another.
The economy dies when folks make huge amounts from wages earned last decade (or inherited) at the expense of workers today being able to get by.
What we need is responsible management instead of the corrupted muppets we have in government today.

This latest expose from Denning, regarding the Biggest Sale of the Century, of a Govt asset, since T2 & T3 ( Telstra ) Launch - way back in 2006. It is indeed an eye-opener for disheartened, shell-shocked Mums & Dads recovering the aftermath of the GFC.

The Bligh Govt is woefully suffering a meltdown in Govt Assets, widespread Union backlash; Hospital & nursing staff debacle; S & P's credit downgrade etc,is fighting for it's Life to gain Political momentum. Paradoxically, poor Anna's popularity plummets dismally, while the alienated, accident prone Opposition, wrangle behind close-doors,in puerile secretive assassinations /recriminations ! As Election Day fast approaches, she will have to pull many Bug's Bunnies, out of the proverbial magician's hat, to see her returned to Govt with a squeaky clean majority. In Qld, unfortunately, she won't have the benefit of renegade Independents to augment her over the finishing line - like Big Julia did. This sell off, might conceivably be the impetus to turbo charge her survival.

The decisive moment comes on the 10th, when the Pospectus is fully released. So far, it's been relatively low key, with Andrew Fraser taking the knock-downs, with civility and aplomb. On the other hand, they have already spent $ 2.5 M on Advertising, and a promise to all Qld Rail workers of a gratuitous $1000.00 worth of shares from the float. Of the $15 B sale, $ 3B is debt funding; $2.5B is Capital expenditure and fire power. $500 M earmarked for Govt PR, advertising, printing and good will ?

Not readily stylishly apparent, and glaringly absent, is the lack of TV promotion, and fashion glitz. The recent Myer Launch featuring glamorous. semi-naked Jennifer Hawkins, parading graciously on the catwalk. Including Megan Gale, and irrepressible Lara Bingle, would have exacerbated the razzmatazz, and drummed up support among the Women clientele - in marked contrast to an otherwise staid, lackluster affair.

Enigmatic Bjelke Petersen would be cussing in his grave, to see his beloved QR, with a history spanning 145 years, and generating billions in income, suddenly solf off to BHP,

cont..

Rio Tinto, a Chinese Consortium etc, that have most to gain from the fire-sale. Described as the Biggest Freight Handler in Aust, and the largest Coal Hauler Globally, it will have to conditionally pay the much debated Resources Rent Tax, and the Carbon Tax, the Gillard and Green's agreed on, to form Govt and a hung Parliament.

In an obvious showdown, BHP is QR's biggest customer, and with partner Mitsubishi, have the biggest stake, and most to lose, should the package fall into Foreign hands. Added to the conundrum, the ACCC wouldn't allow another serious competitor. Realistically, the float is a PR fiasco, and the Public will have minimal share in offerings and final distribution. Small Investors wouldn't even be considered in the present scheme. The Big Australian, to be expected, will have the giant share and final bid. After all, it's in the National Interest to keep the farm, in-house. History records,initially the giant Miners made a tentative bid, which was well below the EPS value of QR, and was subsequently, and rightfully rejected by Management. BHP in conjunction with Rio and Fortesque, own Pacific National Rail Authority in WA.which is involved in Coal/ Mineral Ores freighting in Pilbara.WA. There is little doubt, they know the full value of such a lucrative, give away prize.

The sale includes Coal Business, Freight, Coal Rail tracks, and workshops in Townsville, Redbank and Rockhampton. One can be fairly certain, it's highly unlikely this extra baggage would be entertained. BHP runs a lean and mean machine. Klopper's is no Union lover at best.

Ultimately, Bligh's Govt has not been truthful, forthcoming or transparent.The shenanigans of a Prospectus, and invitation for interested Parties, to apply, through a Govt web site is riddled with format errors, lack substance, and highlights the abysmal amateurish methodology a State Department Office is held responsible for, in the Tender process and Analysis.

At the very least Andrew Fraser should be held accountable - no less.

There are a number of problems associated with privatising a monopoly.

Monopolies can be their very nature dictate costs, and terms.

Secondly cartels are formed either informally or formally.

Why doesnt the Australian government provide strong consumer protection and secondly reinforce those that already exist?

Would you bite the hand that was most likely to make political donations?

It,s hard to have things both ways. A govt that interferes in private business is labled socialist by people when it suites them.
You can't forcast what might happen, private is always better for a more efficent company. Deal with any bad bits by legislation later.

http://forum.onlineopinion.com.au/thread.asp?article=11068#185397

JamesH, a conservative Kiwi government just had to buy back some of their rail assets that had been sold off by the former Labour government. They are now in the process of spending a fortune rebuilding it.

Vic rail bought cheap nasty under powered trains a few years ago from China that failed constantly. They now have had to recently replace them with more expensive but reliable ones from France.

Why Australia is not capable of designing & building its own trains, nobody is even asking that question.

Of course the Bradken factory at Runcorn which was making the rail undercarriage has just closed down with the loss of nearly 200 jobs and the replacements will be coming from, you guessed it China.

BTW, as a child in the 60's i don't ever remember the Phone needing repair or my parents complaining about the bill, when it was all the PMG department.

http://forum.onlineopinion.com.au/thread.asp?article=11068#185400

RObert, correct, every possible outcome ends in the taxpayer losing.

1, it all goes well, & after a short term gain, treasury loses a cash cow & must cut services, raise taxes, or a bit of both. Coming off the high, current spending, plus the post sale splurge, the future fall of our economy in QLD will be horrendous. One could be forgiven for thinking, this is "the plan" to hand the LNP a poison chalice & hopefully make them into a 1 term wonder.

2, GFC2, growth in every single economy is slowing, sooner or later the Chinese economy will also slow down, when it cuts imports of coal, iron ore, gas, etc.

The poor fools who bought the shares will end up where T3 shareholders are now.

3, we could work out a dozen variations on these 2 basic scenarios & it would always end up with us losing.

The Clem7 tunnel numbers have been inflated by a Translink bus service that goes backwards & forwards through the tunnel both ways empty all day, every day, every 15 minutes.

http://forum.onlineopinion.com.au/thread.asp?article=11068#185424

Ozandy, your last line nails it, anybody who would give their 1st preference vote to the Labour, Liberal, green or National parties is without doubt mentally ill.

We need a new 3rd force party in politics, or a Real lobby/protest group, not getup who are just cheerleaders for the Red/green/getup/labour Communist coalition.

Cracker night is coming up Friday, 06/11/2010.

How about it guys?

The article makes too many simplistic assumptions whose social consequences have already proved disastrous; in general, that private corporations are 'better' at operating assets than governments. Amongst other things, this assumes that every facet of asset management can be measured in dollars. The resulting arguments are complex, diverse, and inevitably lengthy, and are best summarized by going to the website http://www.thecorporation.com/ and getting a copy of the video from the local library.

This is merely one question of many devolving around the community/corporate issue that is essentially philosophical, not political or financial. If you want a world in which a wealthy elite is free to seek maximum profit at the expense of everything else (including the environment and the general population), then the corporate model is the way to go. If, on the other hand, you value quality of life and moderate wealth for a majority, community and environmental concerns must take precedence over profit, something that the corporatists will ruthlessly resist.