"The price received for assets has been less than their value in continued public ownership": John Quiggin. Photo: Paul Harris
Economists have warned the Abbott government not to rush to sell off Australia's remaining Commonwealth-owned businesses, saying the record of privatisation in Australia has been poorer than people think.
The chairman of the Australian Competition and Consumer Commission, Rod Sims, sparked debate this week when he was reported to be urging the government to consider selling off assets such as Medibank Private and Australia Post.
He later clarified his remarks to say he was talking about the benefits of privatisation in general.
Heading for privatisation?: Australia Post. Photo: Ken Irwin
But some economists have warned the government not to sell off the country's remaining Commonwealth-owned businesses, saying Australia had not been well served by the sale of Telstra, Qantas and Sydney Airport.
''The record of privatisation in Australia has been poor,'' John Quiggin, of the University of Queensland, said.
''In general, the price received for assets has been less than their value in continued public ownership. And conversely, in cases where privatisation was proposed but did not go ahead, the actual earnings received have been more than the return from the estimated sale price.''
Professor Quiggin said Australia Post was a natural monopoly and ought not to be privatised.
In the case of Medibank Private - which is likely to be sold - the case was ''less clear cut'' but the issue ought to be assessed as part of general health policy, including proposals to end free bulk billing, he said.
According to the Department of Finance, there are seven federal government business enterprises left: Medibank Private, Australia Post, NBN Co, Defence Housing Australia, Australian Rail Track Corporation, Australian Government Solicitor and ASC Pty Ltd (formerly Australian Submarine Corporation). Other businesses wholly owned by the federal government are AirServices Australia, Australian River Co and the Albury-Wodonga Corporation. The Commonwealth also has a 13 per cent stake in Snowy Hydro Limited.
Last financial year the seven GBEs collected $462 million in dividends for the government, with Australia Post accounting for the vast majority, at $244 million.
Chris Richardson, a director of Deloitte Access Economics, said he was not opposed to privatisation but the government should not sell off businesses in a bid to reduce the budget deficit. '''When government debt and deficits are front-page material, you've got politicians who want to sell stuff. But privatisation doesn't make deficits better … and it's not a panacea for debt.''
Bill Mitchell, of Charles Darwin University, said he was opposed to privatisation because society was typically worse off when it happened. ''The selling off of an enterprise that delivers a cash flow is a ridiculous thing to do.''
Bob Walker, of Sydney University, said the record of privatisation was not good in Australia, and the federal government needed to consider any privatisation on a case-by-case basis.
