01-03-2020, 09:35 AM
(This post was last modified: 01-03-2020, 09:54 AM by thorn bird.)
I've always felt that privatisation of Australia's vital infrastructure was a massive fraud perpetrated on the Australian public.
All perfectly "legal" of course, but soft corruption nevertheless. Those responsible will no doubt get their "cut" sometime in the future and I have no doubt that some already have.
From local shire councils to the highest tiers of government these shady deals get done. The losers are us everyday Australians who have to foot the bill for the avarice, self interest and often complete incompetence within the public sector.
ADAM CREIGHTON
ECONOMICS EDITOR
• 10:46PM JANUARY 2, 2020
• 91 COMMENTS
Rod Sims has accused state and federal governments of using privatisation to increase tax by stealth — selling government businesses at inflated prices on terms that allow the new owners to gouge customers. In a wide-ranging interview with The Australian the chairman of the powerful Australian Competition & Consumer Commission also took aim at courts for setting unrealistic standards of proof that had undermined the regulators’ efforts to boost competition.
“The idea you privatise to maximise returns has taken hold and it is destroying privatisation,” Mr Sims told The Australian. “People in the street say when you privatise, prices go up; well, that’s exactly what’s happening,” he added, in remarks that follow years of growing resentment about rising energy prices and, more recently, airport charges.
Mr Sims, who will be the longest-serving head of the competition and consumer watchdog when his term ends in 2022, said ports, energy companies, airports and gas pipelines had been sold at high prices because the new owners could put up prices.
“Rather than privatise to benefit their constituency, they privatise to maximise proceeds so they get money in, and their constituency gets taxed,” he said, singling out the sale of the Port of Newcastle in 2014 and Sydney Airport in 2002 as egregious examples.
“They bought the port for $1.75bn, immediately revalued it to $2.4bn, put up prices by more than 40 per cent; maybe the government didn’t think the new owners would be so naked in their greed,” Mr Sims added.
“And people were blown away by how much Macquarie paid for Sydney Airport; well, no wonder. They doubled the landing fees prior to selling it and they gave the new owners first right of refusal over the next airport — effectively saying ‘do what you like with car park fees, do what you like with hire cars, taxis’.
“You’ve had this coming together of governments looking for non-obvious ways to tax the community with academic theory that has wandered into a very weird place,” he said, referring to a strand of economics that, argues monopolies do not need to be regulated because new firms will enter the market if they misbehave.
The federal government sold most of its remaining businesses in the 1990s, including Qantas, Telstra and Commonwealth Bank.
In October, Josh Frydenberg ruled out re-establishing “asset recycling” incentive payments for the states to sell assets as a way of paying for new infrastructure, which had helped supercharge a privatisation boom in NSW up to 2017, including sale of three electricity transmission networks for more than $34bn.
Mr Sims said a senior state government bureaucrat had conceded that privatisation had become a covert method of taxation: “He said to me ‘we don’t have the tax base any more, so this is a way we can tax’.”
The government last month backed a Productivity Commission analysis, against the recommendation of the ACCC, that found the nation’s airports were not gouging enough to warrant greater oversight.
Mr Sims said the introduction of an “effects test” in competition law — prohibiting behaviour that had the effect of “substantially lessening competition” — had “changed behaviour”.
“Previously, lawyers would advise corporate Australia that they could do whatever they wanted to their competitors to knock them out, provided the action they took was one other players could do,” he said.
All perfectly "legal" of course, but soft corruption nevertheless. Those responsible will no doubt get their "cut" sometime in the future and I have no doubt that some already have.
From local shire councils to the highest tiers of government these shady deals get done. The losers are us everyday Australians who have to foot the bill for the avarice, self interest and often complete incompetence within the public sector.
ADAM CREIGHTON
ECONOMICS EDITOR
• 10:46PM JANUARY 2, 2020
• 91 COMMENTS
Rod Sims has accused state and federal governments of using privatisation to increase tax by stealth — selling government businesses at inflated prices on terms that allow the new owners to gouge customers. In a wide-ranging interview with The Australian the chairman of the powerful Australian Competition & Consumer Commission also took aim at courts for setting unrealistic standards of proof that had undermined the regulators’ efforts to boost competition.
“The idea you privatise to maximise returns has taken hold and it is destroying privatisation,” Mr Sims told The Australian. “People in the street say when you privatise, prices go up; well, that’s exactly what’s happening,” he added, in remarks that follow years of growing resentment about rising energy prices and, more recently, airport charges.
Mr Sims, who will be the longest-serving head of the competition and consumer watchdog when his term ends in 2022, said ports, energy companies, airports and gas pipelines had been sold at high prices because the new owners could put up prices.
“Rather than privatise to benefit their constituency, they privatise to maximise proceeds so they get money in, and their constituency gets taxed,” he said, singling out the sale of the Port of Newcastle in 2014 and Sydney Airport in 2002 as egregious examples.
“They bought the port for $1.75bn, immediately revalued it to $2.4bn, put up prices by more than 40 per cent; maybe the government didn’t think the new owners would be so naked in their greed,” Mr Sims added.
“And people were blown away by how much Macquarie paid for Sydney Airport; well, no wonder. They doubled the landing fees prior to selling it and they gave the new owners first right of refusal over the next airport — effectively saying ‘do what you like with car park fees, do what you like with hire cars, taxis’.
“You’ve had this coming together of governments looking for non-obvious ways to tax the community with academic theory that has wandered into a very weird place,” he said, referring to a strand of economics that, argues monopolies do not need to be regulated because new firms will enter the market if they misbehave.
The federal government sold most of its remaining businesses in the 1990s, including Qantas, Telstra and Commonwealth Bank.
In October, Josh Frydenberg ruled out re-establishing “asset recycling” incentive payments for the states to sell assets as a way of paying for new infrastructure, which had helped supercharge a privatisation boom in NSW up to 2017, including sale of three electricity transmission networks for more than $34bn.
Mr Sims said a senior state government bureaucrat had conceded that privatisation had become a covert method of taxation: “He said to me ‘we don’t have the tax base any more, so this is a way we can tax’.”
The government last month backed a Productivity Commission analysis, against the recommendation of the ACCC, that found the nation’s airports were not gouging enough to warrant greater oversight.
Mr Sims said the introduction of an “effects test” in competition law — prohibiting behaviour that had the effect of “substantially lessening competition” — had “changed behaviour”.
“Previously, lawyers would advise corporate Australia that they could do whatever they wanted to their competitors to knock them out, provided the action they took was one other players could do,” he said.