PSI demands an end to privatisation in South Australia

On Monday, 16 August 2021, PSI Sub Regional Secretary for Oceania Tom Reddington appeared alongside Professor Elizabeth Dabars AM, Secretary of the Australian Nursing and Midwifery Federation (SA Branch), and leading international economist Dr. Anis Chowdhury, at the Select Committee on the Privatisation of Public Services in South Australia.

South Australia has one of the worst records of privatisation in Australia and the parliamentary inquiry provided a crucial opportunity to take stock of this failure and raise the need to urgently rebuild quality public services for all.

Ms. Debars emphasised the importance of the inquiry, stating that it “cannot be clearer: privatisation of health care services doesn’t work. It fails the community both in service delivery and economically.”

This sentiment echoed previous work undertaken by PSI in Australia, with Mr. Reddington using his opening remarks to reflect on 2017’s People’s Inquiry into Privatisation, which studied the impact of privatisation in 12 cities and regional centres across the country. “Unequivocally,” said Mr. Reddington, “the message was that privatisation had failed and governments must take back control.”

“For communities, privatisation has meant great loss and anguish,” Mr. Reddington continued, “bus routes cuts, rising electricity bills, TAFE closures, disappearing jobs and apprenticeships, underfunded fire services in a warming climate, and the fear of ending up in a private aged care facility. Communities are ready to rebuild a democratically accountable public sector to provide the essential services, infrastructure and institutions that enable them to flourish.”

As part of PSI’s submission to the inquiry, Dr. Chowdhury wrote the statement reproduced below surveying the international scene of privatisation failures, and stressing the steps governments must take to ensure quality public services for all.

False Promises and the Ugly Face of Privatisation

The South Australian parliament has established a committee on privatisation to work out whether more public services should be privatised. They should accept the international and the national evidence – privatisation has failed the public. There has been a stark difference between the benefits we were promised and the actual outcomes. In almost every instance, privatisation has diminished effective public budgeting, driven down wages, reduced the accessibility and quality of services, increased inequalities, and even resulted in human rights violations.

When properly compared, the private provisioning of public services is rarely, if ever, superior to public provisioning. In many instances, public provisioning is at least as good as, if not better than private provisioning.

Efficiency or cost savings, the main argument for privatisation, are not the result of ownership. Such gains are predominantly due to democratic oversights ensuring competition, accountability and transparency. Management reforms, including those rewarding higher labour productivity and participation, are also critical.

Efficiency or cost savings... are not the result of ownership.

It is not just those on the left who think so. Rod Sims, Chair of the Australian Competition and Consumer Commission, is now a committed sceptic, after advocating for privatisation for over three decades. John Hewson, former leader of the Liberal Party, has confessed that privatisation has “failed generally in delivering socially acceptable outcomes.” Thus, as the respected economics columnist Ross Gittins wrote, “Privatisation: The experts told us not to worry – but they were wrong.”

Despite cuts in public expenditure, government debts continue to grow, necessitating further sales of public assets. New private owners of formerly publicly owned assets continue to get tax breaks and subsidies while evading tax. It never occurred to privatisation advocates that wage cuts are not an efficiency gain; they increase inequality, driving debt and depressing aggregate demand.

Despite cuts in public expenditure, government debts continue to grow.

Privatisation has even had an impact on the pandemic. Six special rapporteurs of the United Nations have testified that COVID-19 has exposed the true face and catastrophic impacts of privatising vital services.

The solution is clear. There should be a moratorium on privatisation programs and an objective comparative social and environmental cost-benefit analyses of private vs. public options in providing public services.

Where privatisation is deemed preferable, the government must take back the regulatory space and set appropriate regulatory and democratic oversight mechanisms involving wider community stakeholders. Where past privatisation programs have failed, the government must take back control while instituting and enhancing democratic accountability and management discipline.

The solution is clear... a moratorium on privatisation programs.

In either case, there should be a participatory and transparent monitoring and evaluation framework for the provision of public services.

Dr. Anis Chowdhury is Adjunct Professor, School of Business. Western Sydney University and has held a range of positions in Australia and internationally, including Director of Macroeconomic Policy and Development Division & Statistics Division, UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP), Bangkok; former Chief, Financing for Development Office, UN Department of Economic and Social Affairs (UN-DESA), New York.

Dr. Chowdhury's paper produced for submission to Select Committee on the Privatisation of Public Services in South Australia can be downloaded below.