One of the biggest open secrets in Australian public policy-privatisation has failed (Canberra Times, 27 July 2020)

Aug 3, 2020

Australians hate privatisation. It is politically toxic and has brought down governments on both the political left and right.

The strength of public opposition is such that governments actively deny that their decisions even constitute “privatisation”. They have often sought out alternative, contracting arrangements to mask the transferring of public assets and functions to the private sector.

The public’s scepticism of privatisation is not without reason. There is growing evidence privatisation has not delivered better services or lower costs. Instead, it has created privatised monopolies in electricity infrastructure or resulted in failed market experiments in vocational education, underwritten by taxpayers. It has reached a point where previous supporters such as ACCC chair Rod Sims have felt the need to go on the record saying recent privatisations had “severely damaged” the economy.

Yet despite all this, governments of all persuasions seem to be continuing down the privatisation path whether it is ports, land title offices or outsourcing core functions of government to contractors and consultants. For those opposed to privatisation, it can feel like a one-way journey, with the occasional win, like preventing the privatisation of the Medicare payments or the visa processing system.

Even though there is wide public support for reversing privatisation in Australia, many think serious proposals are a distant dream. Though the economic fallout from the pandemic led to a discussion about nationalising Virgin, even with wide public support for taking an ownership stake, public ownership was never seriously considered.

But what everyone has missed when they focus on whether Qantas or Telstra should return to public ownership is the biggest open secret in Australian public policy – that Australian governments have regularly reversed privatisation over the past 20 years.

Research I have done, in collaboration with the Transnational Institute, for their new Public Futures global database of de-privatised public services, has identified over 40 examples where Australian governments have reversed privatisation. There are examples in every single Australian state and the ACT.

In the last year alone, the Queensland government has taken back two prisons from the private sector, the Western Australian government has reversed the privatisation of the operation and maintenance of Perth’s Water Corporation and the ACT government has brought school cleaning back in-house to the public sector.

These examples challenge the assumption that once privatisation occurs, it does not get reversed. The failure to recognise how common it is has made our public policy discussion poorer. This flawed assumption that privatisation does not get reversed has prevented public ownership from being seriously considered as a realistic option by political leaders when privatised services fail.

The reasons for these reversals of privatisation are diverse from better value for money and increased public investment in quality services to better working conditions and broader community policy objectives. What the reasons have in common is the recognition that the private sector does not inherently deliver better outcomes for the community than the public sector.

The reversals have occurred through a variety of means such as the termination of public-private partnerships, taking over after a private provider withdraws from service provision, buying back ownership of companies and insourcing work that had been outsourced when contracts end.

The most well known cases of privatisation being reversed relate to prisons such as the Dame Phyllis Frost Centre in Victoria and hospitals such as Port Macquarie Base Hospital in NSW, built through public-private partnerships, that have returned to public control. But these examples only skim the surface.

The reversals of privatisation over the past two decades have been far more extensive, encompassing a range of different sectors and functions beyond health and prisons. It has covered everything from railways in Victoria and Tasmania and building maintenance work in Queensland to vacation swimming programs in Western Australia and local council elections in NSW.

Though reversals have primarily occurred under Labor governments, there have been some examples where Coalition governments have taken back services from the private sector. In Victoria, the Napthine Government partially bought back Mildura Base Hospital in 2013 while the NSW Coalition government bought out the privately run Sydney Light Rail company, placing it under public ownership in 2012, to enable the CBD light rail to be built.

These case studies demonstrate the reversal of privatisation is far from radical and an understandable response by governments both on the left and right to meet policy objectives and address market failures.

It shows that if we genuinely want to improve our public services and deliver better outcomes for all Australians, taking back privatised functions needs to part of the policy discussion.

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