Do you agree with privatisation?
What are your thoughts about privatisation? I reckon it is a failed experiment and that we could trust our services more when they were run at the government level.
The chair of the Australian Competition and Consumer Commission (ACCC) Rod Sims had some interesting thoughts on the topic recently.
In a speech, Mr Sims slammed the privatising of assets without allowing for proper competition or regulation, saying that they created private monopolies that raised prices, reduced efficiencies and harmed the economy.
Mr Sims put forward two possible solutions to avoid privatisations creating future unfettered private monopolies.
“One potential solution is that all governments agree not to privatise an asset unless there has been a prior public regulatory and competition assessment by a Commonwealth or State regulatory body,” Mr Sims said.
“Another approach would be for a market power test to be introduced to determine whether assets with significant levels of market power should face some form of regulation.
“These are important issues that deserve more discussion among those interested in the health of the economy,” Mr Sims said.
Many monopolies are subject to regulation, such as gas pipelines, electricity networks, railways and the NBN.
In contrast, many ports and airports, which are essential gateways for our economy, are largely unregulated, mostly due to decisions made when they were privatised.
This lack of regulation of monopolies may increase the sale price, but ends up being, via higher prices to justify the higher sale price, a multi-decade tax on Australian consumers and exporters.
“Privatisation can generate important benefits to the economy, such as improved incentives for cost control, investment and innovation to meet the needs of consumers,” Mr Sims said.
“There have been many examples of privatisations that have been done well and that have benefitted Australia. The privatisation of Qantas was done appropriately, for example, and the privatisation of Telstra was accompanied with measures to promote rather than constrain competition.
“The problem is that, in more recent years, many of Australia’s key economic assets have been privatised without regulation, and often with rules designed to prevent them ever facing competition. This makes us all poorer,” Mr Sims said.
“You regularly hear people calling for microeconomic reform these days. The best way to do that is to expose more of our economy to competition, and by dealing with excessive market power. Through some poorly formulated privatisations, Australia has on a number of occasions been doing the opposite.
“We should either privatise to improve the efficiency of our economy, which clearly can be done, or not privatise at all,” Mr Sims said.
What are your thoughts on privatisation? Which institutions and companies do you think should be nationalised again?
No, as In most cases privatisation is done to gain money -- and ends up costing us the taxpayer much more in the long run -- watch out the post office will be next!
Telstra was a real loss for so many.
Most of the time nothing is put b4 the people b4 it is just done -- it is wrong