Beware governments fattening up public companies for privatisation." ~ John Menadue

THE CHAIRMAN of the Australian Competition and Consumer Commission (ACCC), Rod Sims said recently:

Privatisation is costing consumers and damaging economic reform. Poorly regulated privatisations are driving up prices and have little to do with economic reform … this situation is getting worse and as the main concern of governments with privatisation is maximising proceeds from the sale by fighting against effective regulation. … A sharp uppercut is needed.

[Privatisation] is increasing prices. … The whole idea of asset sales is that the private sector can run them more cheaply than the public sector. … Very bad reform implementation [of privatisation] has been a big part of the current backlash against any economic reform.

I have repeated below an article I wrote ‘Fattening up for privatisation’ on 29 July 2014.

The NSW Premier says that privatisation is the only way to go to fund new infrastructure. I doubt it. In the short term it may give a “sugar hit” but it often brings long term damage.

But if governments do decide to go down the privatisation route it is important to first get competition and regulation right.

I argued in my blog on 6 January this year, that the privatisation of Telstra by the Howard Government was a serious mistake, or at least the privatisation of the network with its cables, wires and exchanges. Telstra should have been structurally separated and if privatisation was preferred then only the retail arm should have been sold.

If the wholesale arm, the cables, wires and exchanges had stayed in public hands we would now be well on the way to an NBN. The self-off of Telstra’s wholesale arm meant that the NBN had really to start again from scratch.

read more: https://independentaustralia.net/politics/politics-display/privatisations-lasting-damage-to-the-economy,9303