That's a good point, csteele.

>>While I get that it probably shouldn't make a loss Australia Post needs to make corporate profits because why?<<

The short answer is that it doesn't "need" to make them. But it is generally a good thing to conduct business along "corporate" lines, in order to avoid slipping into managerial laziness.

Which, it would appear, is what happened in the UK.

This, from the current issue of The Economist:

http://www.economist.com/opinion/displaystory.cfm?story_id=14744974

"In the 1990s the Royal Mail was a model modern post office. French and German postal executives used to visit and learn, and it profited from selling its know-how around the world. Today, starved of the investment in automation it so badly needed, the Royal Mail is 40% less efficient than its local competitors."

Good management, coupled with a "Board of Directors" mentality would have not allowed that to happen. The lazy view is to blame the fact that it is a public utility, and that the private sector by definition would run it better. But the reality is that governments fail to appoint competent management, and enable rigorous oversight.

This is the line taken by The Economist:

"Government ownership will restrict their liberty, and lead to deepening losses and, in the end, taxpayer bail-outs. Pressure from private shareholders, in contrast..."

To me, that is putting the cart before the horse, and hiding the problem behind the solution. Regrettably, though, history proves them more accurate, and makes me the eternal idealist.

Dear Perciles,

Was that gift intentional?

How on earth did the Royal Mail ever become "model modern post office" that was the envy of "French and German postal executives" who "used to visit and learn" in the first place? Through proper bloody management by government!

So here is this lot saying they have to privatise to make it work because the workers have stuffed the thing up. Pig's arse.

Why are so many of our governments failing to run our public institutions properly and why are we letting them get away with it?

Which twit in our own government thought it was too expensive for our services to fly our dead home so let's use a private contractor instead? Oops, the body got swapped?! Not our fault, blame the contractor!

Better yet let's privatise our Wheat Board. Oops, they've been doing what? Giving nearly half a billion dollars of kickbacks to a regime we are about to go to war with? Hell, not our fault you see we privatised them a few years back. Ministerial responsibility? None here.

Lets sell off the Commonwealth Serum Laboratories then bitch about the prices they want to charge for our vaccines or about those they decide not to produce even though they protected our rural folk.

Even better idea, sell off Telstra. Oops, it ain't our fault we have fallen so far behind in IT infrastructure, it's the Mexican's.

These selloffs are not about money, they are about governments devolving responsibility, and we just buy the spin.

The next party who wants to step up to the plate and says it wants to run these institutions properly rather than sell them to the highest bidder gets my vote!

All good questions, csteele.

>>Why are so many of our governments failing to run our public institutions properly and why are we letting them get away with it?<<

The answer to the first is that government departments tend over time to become safe havens for our most incompetent managers. They are not challenged, their performance is not measured, and their "key success factors" have more to do with irrelevant feelgood bureaucracy than real results.

It is therefore almost by accident that a competent management is occasionally able to provide a public service efficiently.

And also almost certain that this state of affairs will not last.

Think of it this way. You are running a fine hospital. It is clean, efficient, and its staff are helpful and productive.

The hospital down the road is badly run, with patients left in corridors for the paparazzi to splash over the front pages.

You ask the Department to invest in some new diagnostic equipment, and for some money for minor refurbishments.

The other hospital asks for three times as much money for vague programmes to reduce waiting times, to hire more nurses (to attract them away from your hospital) and briefs a friendly reporter that the minister has "refused to help".

Which hospital will get the funds? And how will throwing more money at incompetent management help the sick?

More relevant to your hospital, what sort of message is that sending to you and your staff? That incompetence is rewarded, while efficiency is actually a handicap.

Which is, it would appear from the Economist article, what happened to the UK Post: they were well run, so became starved of new investment.

Regrettably, the entire system is designed to foster incompetence, simply through the desire of politicians and management in the public service to keep their jobs, and the bloated pension entitlements that go with them.

Why do we continue to let them get away with it?

Because they represent a significant voting bloc. And you're hardly going to vote yourself off the gravy train, are you?

Squeers “We are entering an era of corporate governance--is this not patently obvious!”

Not really, performance improves when the ‘operator’ of any business is not the ‘regulator’ (just as separate umpires oversee a cricket match, supposedly independent of either playing side) and may be applying agendas which are not in the best interests of the business.

“"The man without a stamp is rich in spittle".”

And for that man, what is the point of a stamp which costs twice as much when supplied by government than when it is supplied by private enterprise?

So could anyone tell me - why should a postal service be given special protection, through access to an endless amount of tax payer funding, instead of being expected to provide commercial value and economic benefit to its users for what is a commercial service (level playing fields come to mind)?

Csteele “These selloffs are not about money, they are about governments devolving responsibility, and we just buy the spin.”

Monopolies, inefficiencies, insider-deals, despotism and cronyism are the hallmark of Centralized government and centralized control.

Personally I am all for devolving everything… less power to the federal government, not more… it is. After all what really makes sense.

As for selling off government businesses.. it is about removing the risk component from the taxpayer and making commercial entities commercial responsible - and that is a good thing, when the tax payer has no direct say over the commercial discipline or integrity of any government operated entity.

I would agree with Pericles and so will not bother to repeat him

Col,
haven't we just seen via the GFC a stunning example of corporate responsibility? And did you watch Four Corners the other night and see the extortionate tolls being charged by privateers?
I don't see why public companies can't be overhauled and run more efficiently. And I don't follow the logic that privatisation equals greater efficiency anyway, when high corporate salaries and bonuses and dividends to shareholders have to be factored into overall costs.
The leaner efficiencies of privatisation are accomplished primarily by screwing the worker: slash the workforce to the bone and keep wages and conditions trimmed to a minimum. Simultaneously, executives are paid obscene amounts on the pretext that that's the only way to attract "talent". What a joke! Executives are the gross gourmands of the business world and the archetypes of corporate "principles".
Excuse me, I think I'm going to puke!