In a capitalist system, private capital has an inherent and ideological obligation to maximise its returns on investment. Those who manage capital have the obligation to maximise returns for their shareholders and to maintain the exorbitant salaries for its CEO’s by any means.
To maximise returns on its investments, they need a political and economic environment with minimum competition and minimum government regulation, but if possible with Government funding without any tax obligations.
Only when those criteria are met will it provide the investor with a lucrative and assured market.
Vital existing community government infrastructures are attractive to capital for privatisation.
Globalisation has assured that privatisation of a nation’s infrastructure is no longer limited to national borders but provides the investor with a global market.
Some examples of existing global privatised infrastructure providers are - refugee detention centre operations, incarceration institutions, health insurance, hospitals, postal, communication, education services and many more such as electricity network providers.
It is not only the corporations and investors that profit from privatisation but also the political parties who receive the bulk of their regular election funds from the corporate world.
The advantage to the political parties is not limited to the provision of its regular election funds.
Elected governments, after the sale of an essential infrastructure, are no longer responsible for the administration of that infrastructure facility.
Further it may give the government temporary budgetary advantages which could be converted to tax reductions for those who provided them with the bulk of their election funds, this will complete the circle.
Neo liberal governments will also use the privatisation of infrastructure to minimise union membership and union power, this was very effective in for instance in the privatisation of the railways.
We will take a closer look at the very topical issue at the moment of electricity prices and its generation, distribution and billing.
After the election in March 1983, the Hawke-Keating Government adopted a Neo-Liberal agenda such as floating the dollar, reducing tariffs and the avoidance of increasing taxes - privatisation of government owned enterprises was used to minimize budget expenditure and raise revenue.
Because of high inflation and to secure an old age pension guarantee, the ACTU agreed to forgo wage increases and swapped them for compulsory employer superannuation contributions which became part of the ‘Accord’.
The sincerity or wisdom of these two labour leaders is questioned by the many that have seen the trickle down promise fail.
Ironically the Coalition at times has hailed this era of labour government as a period of good government.
This is not surprising because since the 1980’s both political parties have spruiked the Neo-Liberal Ideology.
At the National Press Club on Wednesday the 29th of March 2017, the new Secretary of the Australian Council of Trade Unions, Sally McManus, responded to the ambush laid a few nights previously by Leigh Sales of the ABC’s programme 7.30.
Sally McManus was ambushed into stating that ‘some laws could be broken’ without being given adequate time to explain her reasons or her view on that position.
At the same Press Club address, when asked by Katharine Murphy from the Guardian,” if the Neo Liberal ideology adopted by Hawke and Keating had been a mistake”, Sally answered diplomatically, “Neoliberalism has run its course, causing higher prices through privatisation and rising income inequality.”
McManus cited privatisation as an “experiment” of Neoliberalism, which promised to lower prices and improve productivity but instead had increased prices, cut workers’ conditions and caused job losses.
We may find that those who spruik in favour of the privatisation of government infrastructure use some fallacious arguments.
The Neoliberal Kennett government elected in Victoria in1992 claimed that the State Electricity Commission was debt laden and had to be privatised.
In fact in its last year before privatisation it paid $995 million in interest, $191 million in dividends to the Victorian Government and made a profit of $207 million.
The promise was that in private hands, the delivery of electricity would be better and cheaper than the service provided by the old state owned authority.
Since the privatisation of the Victorian Electricity Commission, the consumer price per KWh has increased by 133%. In 1991 the Victorian consumer paid 12 cent per kilowatt hour, now in 2017 they pay 28 cents with the prospect of it increasing to 30 cents /KWh in 2017/18. This will be reflected in future Tasmanian energy prices also.
Since this is multiple times the consumer price index of that the period, at those prices consumers are not unreasonable to expect that their electricity be delivered via gold plated electricity poles as a mark of the promised privatised efficiency.
The Neoliberal governments have failed to deliver lower prices or even managed to control the energy prices.
Once infrastructure is privatised without regulation it is out of government control.
The recent commercial decisions made by overseas corporations, has closed Hazelwood Power Station and as a result privatisation has delivered a national energy crisis instead.
Relevant links to earlier Urban Wronski’s ...
*Bob Lubout is a ‘climate refugee’ from Perth WA. He has been living in Penguin on the NW coast of Tasmania with his artist partner Sandra and their two dogs, Tessie and Winston since 2013. Bob’s work history includes owning his own TV/Electronic repair and maintenance business for many years and travelling all over the world servicing and installing analytical mining and industrial X-ray equipment. He went to Curtin University as a ‘mature age student’ where he gained a Bachelor of Education majoring in Sociology and Politics and then onto Murdoch University where he gained a Graduate Diploma of Science and Technology Policy. This led him to a career as a TAFE lecturer, teaching electronics, maths, science and aviation. Bob now enjoys spending his time researching and writing and flying around this beautiful part of the world in a small aircraft.