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Selling the Golden Geese


Image by author

Roll up, Roll up, Round two of the Great Howard Fire Sale is here!

We’re under New Management, so let’s have a look at what we have on the block today.

We’ve got Medibank, ACS, AGS (don’t worry about acronyms, we’ll get to them later), Australia Post, Australian Rail and state power companies.  Get your bargains here!

The Liberals and Nationals have wasted no time setting up shop again in the temple.  Apparently not satisfied with the billions of public assets sold under the Howard/Costello stewardship, the new government is looking at selling off anything that even appears to compete with private businesses, regardless of any contribution to the public good or the public purse.

Sales of public assets are often touted as solutions to a debt crisis.  The reality is they are a sugar hit for politicians to improve their numbers, and corporations to receive handouts from the public purse.

One thing always missing from the conversations about debt and privatisation is the public interest. For example, was it truly in the public interest to sell Telstra’s copper infrastructure, our major airports, or most of our gold reserves?

Public assets are historically undervalued, and when sold often undergo massive downsizing and service retractions.  In the brave new world of asset stripping and collateralized debt obligations the Australian public needs to take a closer look at what Public Corporations are, what services they provide, what they represent, and what impact their sale would have on the current shareholder… the Australian public.

ACS pty ltd
Formerly known as the Australian Submarine Corporation, this is the primary naval defence contractor for the nation, responsible for the ongoing maintenance of the Collins class submarine fleet, and is currently building our next generation Air Warfare Destroyers.

The company engages thousands of people and businesses, mainly in South & Western Australia, and took many years and billions of tax-payer investment to build it to its current capability.

A quick look at the annual report for 2013 shows that in addition to maintain and building our defence capabilities it made a reasonable return and now holds over $619 million in assets:

Return on equity         4.2%
Dividend                      $8.9 Million
Paid taxes worth         $3.2 Million

This company is a monopoly.  It is the only company in the nation capable of building military class naval vessels and the only one who can service our submarines.  This means any changes of ownership will have a direct impact on our national security.

No other company will ever be able to compete with ACS due to the massive infrastructure investment required.  How can a government put a sale price on that kind of leverage?

If the sale does go ahead, how convenient that ex-Indi rep Sophie Mirabella has been given a golden parachute to corporate boardship.   One wonders which of the large foreign defence contractors would end up owning our naval fleet capabilities, and what Mirabella’s position would be on national security versus company profits.

The Australian Government Solicitor provides legal advice to the government; it was established at Federation and set up explicitly to act in the national interest.

This is a legal practice wholly owned by the commonwealth, which has access to some of the deepest policy secrets of the government.

The AGS website proudly proclaims that it beats private firms due to its knowledge and experience of government work. The sale of the firm would be a wholesale delivery of a huge amount of expertise and knowledge into private hands.  How can there be a meaningful price tag attached to the information bank, integrity & goodwill belonging to this firm?

The high potential for conflict of interest or corruption gives pause enough.  And given that the beneficiaries would only be lawyers able to charge the tax-payer higher rates for their services; how would it be in the public interest to sell?

Australian Rail Track Corporation Ltd
Responsible for over 8 thousand kilometres of interstate rail, the ARTC was established as a single entity for business to contact to arrange freight by rail throughout Australia.  Such was the importance placed on the rail that carries our mining and farming products to port, that both state and federal governments agreed to establish the integrated body.

Privatisation of rail has failed in the UK, with service cuts, fare hikes, and under-investment in infrastructure.  A situation many in Australian urban centres would be familiar with.

Similar stories of sales or deregulation of freight & mass transit exist all over the world.  In the USA the iconic Greyhound bus service now completely gutted thanks to deregulation and forced to cut services to thousands of rural towns.  The cities fare no better, with large cuts to bus & rail that disproportionally impact on low-pay workers.

Land and agricultural resources are vital to the Australian economy, this puts rail infrastructure into the ‘national security’ category.  To sell the ARTC, most likely to a foreign multinational, is to put our future prosperity up for ransom.

Medibank Private
The sale of Medibank is apparently justified by the fact that it is competing with private businesses.  The same argument could be made that Police are competing with private security firms, so should we be selling the police as well?
Medibank covers 29% of the Australian market, or approximately 3.8 Million people.  There are few health insurers who would not want a piece of that pie.  The annual report is positively glowing:

Return on equity         15.4%
Dividend                      $450 Million
Paid taxes worth         $82 Million

As part of servicing a public need Medibank launched AHM, the only insurance that actually spells out (literally in black & white) what cover you need to avoid the Medicare levy, and to stop the Lifetime Health Cover age tax.

Medibank is not a drain on the public purse; it is a leader and award winner in promoting community health; and a leader in the insurance community for high standards.

Finally, it is paying millions of dollars every year in dividends into the public purse.  Given the constant cat-calls for government to be run like a business, it is surprising that there should be opposition to a government property that is making money… for the government.  The only argument for selling Medibank is ideological, as there is no benefit to the public interest.

Australia Post
On the one hand the Liberals and Nationals want the local postie to process your Centrelink forms, on the other they want to sell it.

Given that the coalition wants to shut down the Clean Energy Finance Corp, which is currently earning the tax-payer $200 million per year. It is perhaps unsurprising that they also want ape their UK Tory counterparts who forced a partial privatization of the Royal Mail in the UK in spite of increasing profits.

Some articles are already inserting misinformation about Australia Post having an “ailing bottom line”, the same tactic used by the UK Tories.  The reality is Aus Post paid a massive 18.5% return on equity last year, all “during a period when addressed letters are declining”.

Compare this to the struggles of U.S. Mail.  Some have been arguing that the problems at U.S. Mail are due to unions and no lay-off clauses.  The reality is that the organisation has been reliant on low-skill, low-pay workers to keep overheads down and failed to automate or innovate. In addition U.S. Mail has to contend with government laws that prevent managers making sensible business decisions to restructure or diversify their business base.

This is the success of the Australia Post Corporation; it continues to deliver it’s regulated community service obligations while turning a profit. It has shaken off the assumption that it was an out-of-date institution and built itself into a truly modern business that is making serious money for the tax-payer:

Return on equity         18.5%
Dividend                      $243.7 Million
Paid taxes worth         $447.3 Million

Australia Post is another huge monopoly, with massive infrastructure and service commitments. Regional Australia and many urban communities rely heavily on their post office for far more that buying stamp or sending parcels.

When you read current CEO Ahmed Fahour commenting that community service obligations are ‘stifling’ business, it is easy realise that after privatisation regional and ‘unprofitable’ services would be the first items to be stripped bare.

As illustrated above, ideologically driven arguments for privatisation do not balance when weighed against the Public Good.  Interest rates for government loans are at historical lows so debt hysteria is completely invalid.  And why sell money-making enterprises that will assist in paying back the debt?  Why sell the golden geese?

An interesting attribute that is common across all of these commonwealth companies is that they are flagships in their arenas.  This is because they serve a public need and are capable of having long-term goals beyond mere money making.  These public bodies create new markets and build new products & innovations that private enterprise does not have the courage or resources to accomplish.

The entire premise of establishing a public corporation is to allow essential services like remote mail services, or secure rail transport, to be funded by the profits from the corporation’s unregulated activities.  Australia Post is a classic example; in 2013 regulated services lost money, other services covered the loss and made a profit overall.  The original NBN Co was another; it planned to use profits from urban areas to subsidise connectivity in Regional Australia.

Far from being a two-step process toward privatisation, public corporations need to be maintained as fiscally responsible ways for government to provide for the needs of the nation and spurring innovation, while giving private businesses the opportunity to benefit from new markets and reliable delivery infrastructure.

The corporations and political enablers that prey on these public assets do not care about the base-line services that they provide, only in the short-term profits that they can cleave.

Before Australia sells off its hard-bought Tax-Payer assets, perhaps we should take a closer look and see why private corporations are so eager to get their hands on them.


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  1. M. R.

    If the rabble of wicked children has decided to continue where Little Johnny left off, there’s no way they can be stopped. That is, because only we who are the “Left luvvies” want to stop them. The raving Right will encourage them; and everyone else will just go on having weekend barbecues and watching the teev.

  2. FSM is coming.

    We’ve given the thieves the keys to our home.

  3. Wayne T

    Brilliant summation of the issue, thank you. Now, if only SOMEONE in the MSM would have the balls to put this in print…………..*sigh*

  4. Joe Banks

    Very well done indeed… There is so much clarity coming through on these AIMN articles packed with detail, facts and information – so much the public should know more about. I only wish the MSM journalists would trawl through them for material to use themselves because it would be 100% more illuminating than most of the drivel they spew out.

  5. Phil go man

    E mail your local member to voice your concern. I have to Warren truss as local member for a rural electorate and minister for infrastructure. Let’s hope he stands up libs as he did to hockey

  6. greenbeliever

    I recognise that THEY are the government. They are elected to make decisions which are IN THE INTERESTS of the people of Australia.

    I am completely perplexed and SIMPLY DO NOT UNDERSTAND WHY any government BELIEVES it has the right to SELL any government /Australian OWNED ASSET for any reason.THESE ASSETS are the ASSETS which are owned by the nation.

    Their government has a FINITE TERM of ONLY three years UNTIL PROVEN OTHERWISE.

    ANY ASSET sales should be put to REFERENDUM because those ASSETS belong as much to the AUstralian people as they do to AUSTRALIA the nation.

    SELLING ANY ASSET WHICH IS OWNED BY THE NATION particularly where national security is involved as in all of the BUSINESSES mentioned above is DEPLORABLE.

    HOW CAN SELLING OUR AUSTRALIAN ASSETS be in the INTERESTS of the Australian people????ONCe the ASSET is SOLD which ASSET are they going to create to REPLACE it?
    Privatisation of KEY assets makes AUstralia poorer as everyone who DRIVES ON TOLLWAYS knows.

    ONLY a government on a SUICIDE MISSION.

  7. VoterBentleigh

    Thank you Buzzztj. Governments sell off the most well-run, profitable public assets for their own ends, leaving only less profitable public businesses. Then the politicians say that it is not worth the government investing in public services because, look at the public assets (those remaining), they do not make as much profit as private corporations; they are not efficient, etc., etc., etc. Then the politicians retire and they get a nice little earner for themselves working for the private corporations whose interests they have helped advance.

  8. diannaart

    Many thanks for this work, Buzzztj.

    This is the type of information we, as voters, need to make decisions. Which is why it is here at AIMN and not easily available on MSM.

    When did it happen? When did mainstream come to mean a minority’s interest in preference to public interest?

  9. allenmcmahon

    May as well sell the shop and everything in it as we won’t need anything when we all become serfs in Abbott’s soon to be ideal society.

  10. chips

    Look at the Kiwis, sold the national rail services to an overseas conglomerate for a song, the conglomerate drove it into the dirt taking all the profits and putting the minimum back into the system. The system virtually collapsed and the government had to buy it back at a huge profit to the conglomerate because the country needed the service but the conglomerate didn’t, they’d got what they came for.

  11. Patlee

    Is there anyway we can have say who can sell our assets, because every time an asset is sold it seems as if we the public have no say at all, it’s just announced by the government and sale of the asset goes ahead. Could we have a plebiscite or something so that we the public have some say in its negotiations.

  12. Graeme Rust

    Surely the libs wont want to wreck the country just to give their mates some taxpayer owned businesses ?? would they ?? couldn’t they be charged with acting against the interest’s of the country ??? and given very long jail sentences .

  13. patsy

    how come all these has been pollititions are still running this country…Vanstone…howard …Costello as well as the bolts murdochs jones ackerman etc etc etc……out with the old in with the new… the cowardly lion can not do it on his own… wisdom knowledge…no guts

  14. Terry2

    When Abbott said : “Australia’s open for business” I didn’t know what he meant but now it seems what he was saying was that Australia’s publicly owned assets are for sale : I didn’t agree to this, did you ?

  15. jasonblog

    So, here we are once more on this “neo-liberal” slippery slope that trashes social-democracy & celebrates corporate profiteering… Hmmmm… one gets the distinct impression that Australia’s two major political parties – and yes the ALP is equally blinkered – only have a “vision” for turning Australia into Little America. Yuck! If that’s the case you might want to read up on what is happening State-side. Thom Hartmann and Truth-Out have a lot to offer

  16. Phil34

    It’s all very well emailing each other tut tut what a pack of bastards they are! Get active, tell your local member write to local papers talk back and if they won,t publish yell louder about the economic treason abbot and his mates are committing

  17. Joe Banks

    Buzzztj, I was so impressed I just re-read your article… I have never understood the selling of public assets and the privatising of sometimes essential (and usually profitable) corporations. The ‘sold’ list under Howard and Costello is staggeringly long and it seems this bunch of economic dullards are intent on finishing the job. I can’t remember a government that was so intent on mindlessly destroying the country. And for what, I keep asking myself? They are not unintelligent people but they continue to behave like fools with absolutely no common sense. It’s like a disease with them!

  18. greenbeliever

    The more they sell the more money They have to SQUANDER.
    They might like to BUILD BIG STATUES of themselves. They might like to take more overseas trips in their SQUADRON of millionaires jets.
    IT IS ALL ABOUT THEM and it is not about AUSTRALIA or Australians at ALL.

  19. olddavey

    I thought all the Boxing Day sales had finished.
    But look out, April Fool’s Day is not too far off.

  20. lawrencewinder

    A fine summation… and a depressing continuation of the endemic lack of imagination of a Liarbril Party that has been reduced from being assistant managers to business down to lick-spittle office boys.

  21. Matthew Newton

    The thing I love most about this post is that you can do absolutely nothing about it.

    Not going to try and convince you on the merits of my position as I’d obviously be wasting my time.

    But .. very much looking forward to seeing how much these assets collect.

    And .. very much hoping we stop digging ourselves gigantic debt holes every time we elect a Labor government.

  22. Keith

    Matthew can you name instances where there has been a benefit to the public when government Agencies have been privatized? Can you sincerely say that the service provided is better when privatized, and the cost of the service has not increased? In the past privatization was quite common but the impacts have not brought the promised results.

    In relation to the so called “budget emergency, Chris Berg from IPA, declared “Australia is a very rich country – one of the richest in human history.”. He stated this a few weeks ago, pretty well a contradictory statement to what Hockey has been saying.

    There is bound to be a recession sooner or later and Government Agencies bring in dollars where the GST might be floundering. To privatize is purely an ideological push and provides an avenue for good assets to be squandered.

  23. Keith

    Here is a very perceptive post from an American, it appeared on my wife’s Face Book page:
    Let us be clear about our choice. When we raise taxes on the wealthiest Americans, no one dies.
    When we cut Social Security and Medicare, people die. –Annabel Park

  24. Wun Farlung

    Don’t hold your breath. I can’t recall one instance of any public benefit brought about by privatisation and I doubt Matthew Nelson can.
    The greed driven LNP cheer squad can never admit that the debt comes about because of the LNP habit of not investing in infrastructure and services to give the appearance of budget surplus.
    It’s always about money/profit and me, me, me with that lot
    I am sick and tired of Governments of all stripes trying to run our country like a publicly listed company.
    A little advice to the person/people that monitor this site on behalf of the LNP, remember Anna Bligh

  25. oldfart

    ” It is the only company in the nation capable of building military class naval vessels and the only one who can service our submarines”

    Thats questionable, you are talking about those anti stealth collins class boats arent you

  26. oldfart

    the first privatisation exercise in Australia was the sale of real estate the mental hospitals sat on in NSW, under the guise that the patients would be better in the general population so the are not marginalised, so how did they fare? homeless, flea pit cheap rental in hostels run by unscrupulous land lords or Jail, yep, definitely not marginalised and way better off The shameful part of it was it was a labor government

  27. Greg

    I work at Australia Post as a Postman. The overwhelming majority of the workforce at Australia Post, be they drivers, sorters or retailers, work extremely hard to provide a valuable service to the community. As stated in this excellent article, we not only provide a great service (while getting paid peanuts) but we also generate serious revenue for the government. Selling it for the corporate gain of a few would be an absolute disgrace!

  28. Keith

    Abbott has created a Royal Commission in regard to the bats saga for political reasons. Greg, I think if Abbott was to sell off Australia Post, there should be a Royal Commission as to why it occurred and who will benefit. There is a bit of a smell about it should such a privatization happen. Being on the basis that already there are a number of businesses that already provide an Australia Post service. It is the case in the small township where I live.

  29. Terry2

    With all of these privatisations we have to ask who are the current owners ( that’s you and me) and have they been consulted (answer No) AND has a convincing argument been put to demonstrate the public benefit of selling (again No).

    Without a doubt, overseas private health insurance companies will flock to bid for Medibank Private after all what other business could you buy with a government committed to providing 30% of your income; that’s why British insurer BUPA was so keen to get in to the Australian market by acquiring MBF.

    It’s no secret the international couriers want the parcel delivery business of Australia Post but they don’t and won’t do mail delivery on a daily basis.

    As a part owner I say there has been nothing to convince me to sell out ; these are viable and profitable publicly owned businesses, hang on to them.

  30. Jaya

    I used to work for Australia Post & there was quite a bit of deadwood around at the time but a lot have left now. Most work incredibly hard but as I wasn’t a “lifer” like many. I can say I think they are paid well for what they do vs what they would get paid in the private sector for the same work In saying that I don’t think they are paid too much. It’s no longer the happy place it was when I was there which is sad. Mail sorters are understaffed now more than ever. Turning the business centres into stark parcel pick up places only is a pain in the rear. I have to drive rather than walk to my local post office to pick up registered mail or parcels. There is no need to sell anything off anymore. Both sides of govt are guilty of this. And how do we stop them?

  31. DaveinPerth

    Not that hard to scupper if the ALP has the will.

    “FROM TODAY, it will be ALP POLICY to nationalise Australia Post, Medibank Private and ARTC. There will be NO compensation for the current owners at the time of nationalisation.”

    There. Fixed.

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