The Privatisation Dogma By Richard Miller (London)
I was informed of a nice piece of material by, surprisingly, THEIR ABC, that dealt with one aspect of the privatisation disaster vin Britain, and it is only the tip of the rubbish dump on this topic. As detailed, there is an ongoing issue of the release of raw sewage into beaches and waterways by private water utilities in the UK. In 2021, there were over 370,000 releases of raw sewage, with one company dumping 21 billon litres into a protected marine area off the south coast of England. This all comes from the UK 1989 decision to sell off its water industry to corporate interests with predictable results: “The nine largest water companies have run up debts of $100 billion while issuing dividends of $125 billion. More than 70 per cent of the industry is owned by foreign hedge funds and private equity houses which have scraped from the country's existing stock of water infrastructure every possible scintilla of value.”
Australia has not gone to this extent yet with its water infrastructure, but the sell-off of public assets by the political leaders to their masters in Big Business has gone on in most other areas, with equally disastrous results. There is a correct sphere of activity for private enterprise, and one for responsible government, based around the idea that some goods are so important to the proper functioning of society that the profit motive, which can lead to corruption and crook dealings, needs to be monitored. But there is also a need for a robust free market to also operate. At present we have the worst of both worlds, with globalist-controlled corporates (who are socialist entities, not the free agents of the capitalism of Adam Smith), and oppressive woke Big Government, based upon Maoism, which is merging with globalist corporates in a new form of Mussolini fascism.
“Affectionately known as "Aggie", the charming hamlet of St Agnes in Cornwall is a picture postcard of the best of Britain. Between sandstone facades and lime-washed homes, narrow lanes wind down to a cove of painted rowboats and water as blue as the Aegean.
Last November, however, Trevaunance Cove turned brown with sewage. Lifeguards described the stench as "unbearable". The utility company responsible — South West Water — said heavy rains forced it to release the sewage and storm runoff to avoid the local filtration system becoming overwhelmed.
But the pollution event was no one-off. Two months prior, discharge alerts were in place at more than 100 beaches around the country, and in 2021, there were more than 370,000 such releases of raw sewage by water utilities across the United Kingdom. That year, another company, Southern Water, was fined a record 90 million pounds ($170 million) for dumping 21 billion litres of untreated sewage into protected marine areas off the southern coast of England.
Rivers and lakes have also been used as dump sites; there are credible reports that untreated sewage is spilled into natural waterways every two-and-a-half minutes. As temperatures across the UK have risen, there has been a growing backlash against the government's inability to fix the problem.
At the heart of the scandal is a decision taken in 1989 to sell off the country's water and sewerage industry.
Since then, the profit motive has done its trick: The nine largest water companies have run up debts of $100 billion while issuing dividends of $125 billion. More than 70 per cent of the industry is owned by foreign hedge funds and private equity houses which have scraped from the country's existing stock of water infrastructure every possible scintilla of value.
Now, urgent plans are being mounted to patch-up the UK's water and sewerage network. Perhaps unsurprisingly, the multi-billion-pound cost of this upgrade will be borne not by the industry, but by taxpayers.
Public assets slip away
Although it flirted with the idea of selling Snowy Hydro, and has contracted private corporations for the operation of desalination plants, by and large Australia has not sold its water assets.
Elsewhere, however, politicians have sold public assets from every corner of our economy.
Airlines and airports. Power stations and prisons. Banks and bus routes. Even serum laboratories, and land title registries. The list goes on. And roads … how could we forget the tolls we're paying simply to get around?
There was even a failed bid to offload the visa processing function of the Department of Immigration for about a billion dollars (which lost steam after it emerged a friend of a former prime minister was in the mix for the contract).
But has it worked? Has the sale of assets to free up cash for government expenditure been effective? A long-time searcher for an answer to this question is John Quiggin, a Laureate Fellow in economics at the University of Queensland.
He has little doubt the experiment has failed.
"It is clear that privatisation has not, in general, delivered the promised outcomes," he wrote to one parliamentary inquiry. "It has not improved the fiscal position of governments, nor has there been, in general, an improvement in standards of customer services or a lowering of prices relative to the previous trend."
He describes the idea that asset sales "will allow [governments] to increase public spending or cut taxes without incurring additional debt" as an "illusory belief". In essence, this is because governments have agreed bad deals then misspent the proceeds they did manage to raise.
Have public sales been good for us?
But what if one looks beyond the "fiscal position"?
What if one asks thornier questions about what contribution privatisation has made to the creation of a better, fairer, more harmonious society? Has recidivism been reduced? Are buses and ferries running on-time more often? Are more of the unemployed being helped back into work? In other words, have these public sales been good for us?
The public doesn't think so, and it hasn't for a long time.
Since 2011, Essential Research has repeatedly checked. That year, overwhelming numbers were unhappy about the privatisation of Qantas (44 per cent), and Telstra (53 per cent) and the Commonwealth Bank (42 per cent).
City's 30-year-old bus service to stay same
The polling company found only six per cent of people believed these privatisations had been to the benefit of the general public. Fifty-nine per cent, including a majority of conservative voters, believed it was instead to the benefit of the corporate sector.
Two years later, Essential asked if "having public services owned or run by private companies" was a good or bad idea.
Fifty-eight per cent believed it was bad.
In 2015, it asked more specifically about a suite of government services, including schools, hospitals, prisons, water utilities and public transport. In not one of these seven core categories did people approve of privatisation (public transport came closest, with 37 per cent support compared to 47 per cent opposition; primary schools had the least, 25 per cent in favour, 58 per cent against).
The mood is matched in the birthplace of Thatcherism.
Decades of soaring utility bills and transport costs, combined with tens of thousands of lay-offs, have hardened British people's antipathy to privatisation. Polls have increasingly been calling for the nationalisation of whole industries, including electricity and gas, the postal service and the provision of water and sewerage, and, of course, the country's beleaguered railways, which, by European standards, are appalling. Between 53 per cent and 65 per cent of people believe they should all be brought back into full public ownership.
Clawing back privatised industries
Here, many are watching Australia's first major clawback of privatised industries.
In NSW, private prisons are to be placed once more under the purview of the Department of Corrective Services. These include Junee, which houses almost 500 maximum security prisoners, and was the state's first privately run jail. The Parklea Correctional Centre is likely next, and the Serco-run Clarence Correctional Centre may follow suit.
The Labor government briefed journalists that it was of a mind to return all jails to public hands, and the minister said he would "consider all options as contracts for other privately run facilities get closer to renewal".
Meanwhile, 28 years after the electricity sector was sold off in Victoria, the Jacinta Allan government is pursuing its partial restoration to public ownership. First announced by Dan Andrews, its plan is to revive a version of the State Electricity Commission.
The commission's 21st-century role will be to help ease the Victorian power grid away from coal-fired generation and towards greater reliance on renewable energy. The state will invest $1 billion as part of a reform which promises that Victoria will draw 95 per cent of its power from renewable sources in just 12 years time.
These pledges are widely viewed with scepticism. But perhaps the coming decades will see a return to a more balanced mix of private and public interests in the economy.
PwC review doesn't stop conflicts of interest
Certainly there's now a renewed focus in the civil service — thanks to the PwC tax leaks scandal — on the vulnerabilities created by the outsourcing of its core functions to the voracious big four consulting firms.
If this is a pause, we might perhaps be thankful it has come when it has. Severe drought lies ahead, and so far we have managed to protect our water at least.
Vigilance might be required. The temptation for cash-strapped treasurers is ever-present. Banks and hedge funds are eyeing the growing infrastructure backlog and seeing dollar signs.
There was talk of the sale of Sydney Water prior to the last NSW election. And who could forget those heady days when it came perilously close to being stolen as part of a conspiracy to enrich the notorious Obeid family?
But if a reminder of the risks is ever needed, one need only check in with the state of things in old Blighty. New figures were released just last week, for example: in 2021 and 2022, a combined total of 46.3 billion litres of raw sewage was discharged into the Thames. Ah … thanks, but no thanks.”
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