Economy XXI

This is the new thread for discussion of all matter economic.

RBA rate cut: 1.00%

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183 Responses

  1. Interest rates will always be lower under a coalition government.

    Oh, look!

    A flying pig! Wearing a beanie!

  2. CBA have said they will pass on the full 1%

  3. Westpace are passing on .80%

  4. Nab is 100%

  5. Recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect. Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries. Commodity prices have fallen further. This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.

    The Australian economy has been more resilient than other advanced economies, but recent data nonetheless indicate that a significant moderation in demand and activity has been occurring. With confidence affected by the financial turbulence and a decline in the terms of trade now under way, more cautious behaviour by both households and businesses is likely to see private demand remain subdued in the near term. With that outlook, and with capacity pressures now easing, it is likely that inflation in Australia will soon start to fall. Global disinflationary forces will assist in this regard, though the depreciation of the exchange rate means that the decline of inflation to the target could take longer than would otherwise have been the case.

    Weighing up the international and domestic developments of recent months, the Board judged that a further significant reduction in the cash rate was warranted now, to take monetary policy to an expansionary setting. As a result of today’s decision, the cash rate will be at its previous cyclical low point. Given trends in money market yields, most lending rates should fall significantly and will also reach below-average levels.

    From the media release…
    http://www.rba.gov.au/MediaReleases/2008/mr_08_27.html

  6. Bugger – I’m with Westpac 😦

  7. Dave 55

    I can move you 🙂

  8. Shane – Given the other big 2 have passed on the full amount and it’s only 0.2%, I think I can live with it – afterall, it is nearly 3% below where I got my loan only 3 months ago!!

  9. Dave

    No worries just a polite offer.

    Have just received the official email from the CBA confirming passing on of the full 1% cut effective from Friday 12 December.

  10. Given how quick the banks were this time, I wonder how many draft press releases they had ready to go with variations on the rate cut that the RBA would make. I think they all got the October drop of 1% wrong and hadn’t done their calcs for that size drop (and hence the delay in releasing the pass on amount – no such mistakes this time.

  11. Shane

    Oi! You trying to drum up business??? 🙄

    I hope that reb and I get some residuals. hehe

    😉

  12. joni

    LOL never look a gift horse in the mouth.

    Dave

    They would have had all scenarios ready to go straight away. But no collusion mind you, that only happens between unions 🙂

  13. I noticed Talcum rabbit on about how Rudd said 12 months ago that he was an economic conservative, and that is was tantamount to a commitment to maintaining a budget surplus.

    As Ross Sharp points out:

    Hello Talcum, 12 months ago the Liberal party were saying that interest rates would always be lower under a Liberal Government.

    HELLO??

  14. Hello reb et al. Re Hello Talcum, 12 months ago the Liberal party were saying that interest rates would always be lower under a Liberal Government.

    HELLO??

    I find it odd, weird, strange, nay incomprehensible how these Princes of Economics/The World’s Best could get it all so wrong.

    For example, during the election the Costello smirk saying that interest rates would always be lower under Lib. Except for the following..maybe a world recession. Didn’t you see it coming Peter? Perhaps you did but that it wasn’t politically expedient for you to acknowledge the gathering dark clouds.

  15. How fascinatingly odd Legion (comment 31 on previous), that you should reflect so kindly on avaricious real estate developers, sharp financial brokers, highly leveraged lawyers and unethical middle men. I suppose the self image of these types is that they are “dreamers” taking a “shot at bringing to fruition for a social dividend…”!!!????

    I tend to think that most motives, particularly those I was referring to, were somewhat baser than the wordy description and ethics you seem to attribute to them.

    If I recall, I was referring to speculative wankers. Yes, I suppose they do see themselves as “dreamers”. I think Chris Scase was always referring to his “vision”. I’ve no doubt he’d approve of your description.

  16. As a point of interest, paying off my home lone at the same monthly amount I was when my loan started in early August, on current interest rates will mean I pay of my loan around 13 years early and save around $320,000 on my interest bill. Even if there is a crash in house prices, my house has to drop by over 70% in value for me to come out behind and not even the doom and gloom merchants TB and John are predicting anything of that order of magnitude (mind you, I don’t expect my interest rate to stay at these levels for 17 years …. at least, not going on historical fluctuations)

  17. Another 2K gone from my super since July.

    Not having a mortgage, wouldn’t it be nice to see credit card rates come down a tad? I’ll probably need a credit card when I retire to buy myself some dog food to chow down on.

  18. Has anyone else checked out the comments over at the news.com.au article on th rate cuts:

    http://www.news.com.au/comments/0,23600,24739833-2,00.html

    people complaining that their savings are getting less interest because of the RBA and inflation is higher than their interest rates so they are going to pull their money out and put it elsewhere 🙄

    Talk about dumb – where are they going to put it that gets a higher return with guarantees on the capital? If they put it under their matress they get nothing yet inflation still bites! Still, these are the same people who sang Costello’s praises so make of that what you will ….

  19. I’ll give, ya, doom and gloom, Dave55…

    I am now another $2500 down. My periodontist’s fee, after 3/4 hr work … however, I now have a titanium peg firmly screwed (now there’s an “operative” word!) into my lower jaw…or as I explained to The Minister – “1/2 a frackin’ (Battlestar Galactica fan) space shuttle” 😆 …(she was not amused!)…

    …just another three months and $5000 to go… 😯

    …feels like someone lit a fire in my mouth at the moment!

    …”…aisle B baque…”

  20. TB – Ouch

    At least you have the titanium!

  21. At least you have the titanium!

    Might be hard selling it for scrap! Still, my kids may be OK, definitely cremation!
    …………………………………….

    …and Shane, I see electricity is going up another 14% in Queensland – so much for competition and the free market reducing prices…

    …so my investment opportunities are dwindling, my cost of living increases, worked our arses off for 45 years (government “borrowed” me for two), always been savers not spenders, now our income has been virtually halved…not eligible for any pension or government assistance for the next four years…I’ll have to apply for the dole soon – really god chance of work at 61…I’m feeling really upbeat out the world today…don’t know why others, like JMc, talk all this gloom and doom…absolutely irrational I reckon…

    …spit finished!

  22. That’s “good” not, god – although, you never know….

  23. Titantium TB?

    I had a pair of sunglasses made of titanium once. Maybe your grandkids will be able to make same from their inheritance…?

  24. Not having a mortgage, wouldn’t it be nice to see credit card rates come down a tad?

    LOL!! Such levity Ross!

    The banks are jacking up credit card rates like there’s no tomorrow!

    After all, they’ve got to make a living somehow. It’s just a coincidence that it’s just in time for Christmas.

    “Can’t afford to pay your credit card? That’s ok, we’ll just foreclose on what little’s left of your house value instead?”

    The Banks. Total Bastards.

  25. Actually, there’s only one thing worse than Banks.

    Insurance Companies.

  26. Hey – I resemble that (seeing that I work for a major international insurance company).

  27. oh whateva, talk to the hand….

  28. Bit, techy, reb, thought that was my dept?

  29. This is loosely related to the Economy but has anyone else been following those poor buggers who picked up 20 Million partly paid contributing shares in some half failed Brisbane Motorway for .000001cents each and now find that they unwittingly have purchased in one of their cases a $20 Million enforceable liability because the share they purchased have a enforceable contribution of $1 each.

    I’ve read a couple of articles about it so far but both articles appear to have a certain vagueness to them bordering on the whole story being some sort of urban myth.

    Can anyone enlighten me.

    Back in the 80s those sort of shares if they were that much out of the money come exercise date simply lapsed. If true these ones seem to have come without a prior warning so that anybody having any sort of dabble on the market could end up unwittingly making a financially lethal purchase.

  30. G’day, IATW!

    All quite true I’m afraid! No urban myth! Alan Kohler interviwed the Chairman on his Sunday morning show about three weeks ago.

    Three stages $1 each stage – enforceable as breach of contract and must be persued by by BrisConnections in court so that the underwriter will pay.

    Try this link for more info

    http://business.theage.com.au/business/12-billion-float-to-back-brisbane-road-building-20080519-2g2g.html

  31. Talk about dumb (Dave55).

    Dave, that’s the audience that Murdoch targets. The dumb. You are an axception, of course.

  32. TB

    ” I see electricity is going up another 14% in Queensland”

    Not true!. The regulator only approved a 13.8% maximum increase. Lol. Any odds that the retailers won’t go the full price.

    That means that since the privatisation, the real increase is about one-third. The wonders of the free market as argued by adherents to the neoliberal ideology.

    ” them bordering on the whole story being some sort of urban myth”

    Not an urban myth in this instance. I suspect that those who are in deep shite have no legal escape clause unless they plead diminished responsibility. Very, very dumb.

    ABC did a report on it some time ago.

  33. Miglo,

    Dave, that’s the audience that Murdoch targets. The dumb. You are an axception, of course.

    Actually, I usually stay away from news.com.au but drop in every now again to check out the comments from Milne, Shanahan etc (for humour and to see what ther Oppositions talking points for the day/ week will be) and the occaisional somments section on stories with a political bent. The comments on news stories like this are so predictable over at news. Krudd this, Costello is God (or something), Were all rooned under this Government blah blah blah. I just thought that those comments were particularly uninformed and highlighted the thought that those people put into their comments.

  34. 33. Dave55 | December 2, 2008 at 10:09 pm

    Actually, I usually stay away from news.com.au but drop in every now again to check out the comments from Milne, Shanahan etc (for humour and to see what ther Oppositions talking points for the day/ week will be…

    You’ve hit it right on the nose there. It’s unbelievable how soon after something is raised by Ackerman, Albrechtson, Blair, Bolt, Devine, Henderson, Milne, Shanahan etc. to bash the government with, up pops the opposition in question time and in media stops spruiking that point.

    Not only is the opposition completely inept, they are so bereft of ideas and originality they use radical right wing commentators as their source for debating points against the government, probably because they think these commentators are popular (after all they get lots of web hits don’t they, have newspaper columns (in diminishing sale rags) and appear on The Insiders, an immensely popular political commentary TV panel on the left wing biased ABC).

    How can they go wrong by aping these superstars of the media?

  35. TB

    Yes a 14% rise in electricity will hurt all of us.

    Can you answer me a question ?. Did John Howard introduce a competition authority which began forcing State Governments to offload their publicly owned assets and break them up and sell them off to private enterprise in the name of competition or face less funds from the federal Government? I thought I read items about this a number of years ago.

  36. “the opposition is completely inept, – bereft of ideas and originality”

    Not so. I heard Julie Bishop on ABC radio this morning say that it’s the “quality” of their questions during question time that matter; suggesting that liberal party questions will always be of better quality than labor party questions.

    She refused to be drawn on the “clawing” incident…

  37. Really good point Shane.

  38. Shane

    The responsibility for this ‘competition policy’ goes back to the Hawke/Keating years.

    Try this link for openers.

    http://www.abc.net.au/news/stories/2008/05/06/2236272.htm

  39. “When this Government came into office the problem of inefficient performance was endemic in areas shielded from competition—including domestic aviation, electricity supply, shipping, railways, and telecommunications. The effect was higher costs, poor service and inefficient allocation of resources in the economy. As in all developed economies, these industries provide vital inputs to all our major export and import competing sectors. Australia was placed at a considerable disadvantage in competing against imports at home and in export markets.”

    From Keating.

    More here. http://www.australianreview.net/digest/2001/11/albon.html

  40. 35. Shane

    Sounds like a question for Adrian.

    I don’t recall anything but it sounds like JWH & The Private School Bullies (what a great name for a band!) modus operandi!

    ie Sell publicly owned utilities to the private sector so that the “original owners” end up paying more to line the pockets of private enterprise “entrepreneurs” (eg Robber Barons) for reduced service and/or commodity…

    In other words, the quicker we all get back to the Dark Ages of non-elightenment and religious reliance the better us serfs’ll be…

  41. Nature 5

    Thanks for the links so I have Keating to blame for commencing the offload of publicly owned assets into private hands. he has a lot to answer for now in my view.

  42. Shane, it was part of the ‘common sense of the day. The ideology is called neoliberalism. Keating like all politicians took advice. Unfortunately, Treasury is full of economists who still think this way,

    if you Google ‘Neoliberalism Wiki’ you can get an idea of what it was all about.

  43. Nature 5

    No matter what they call it the shortsightedness of these types of policies are now coming home to roost. Wonder how long it will be before we are like the US where many of the population cannot afford to heat or cool themselves via electricity or heating oil.

  44. It looks like I’m not the only one who thinks that poor worker’s wages are a big part of the problem.

    Mike Whitney: “Every Trick in the Book”

    It all gets down to wages, wages, wages. If wages don’t grow, neither will the economy. Author Ravi Batra sums it up like this in his book “Greenspan’s Fraud”:

    “A bubble economy is born when wages trail productivity for some time and result in ever-rising debt. Then profits grow faster than productivity gains, and share prices outpace GDP growth. However, a time comes when debt-growth slows down, and demand falls short of output, resulting in profit decline and a stock market crash. Thus, the very force that generates the stock market bubble seeds its crash.” (“Greenspan’s Fraud”: Ravi Batra, Palgrave Macmillan, p 152)

    Batra again: “The rising wage gap feeds profits on one side and debt on the other. A time comes when the debt binge slows. That is when the demand-supply imbalance, thus far masked by swelling debt and overinvestment, comes to the surface. That is when profit begins to fall, a the nation receives a sudden jolt. First, the stock market moves sideways. But as excess supply of goods continues, share prices begin to crash. (ibid: Ravi Batra, Palgrave Macmillan, p 153)

    The “trickle down” Voodoo economic model was destined to fail because it was built on a fiction. Prosperity is not possible without the equitable distribution of wealth and fair worker compensation. As the financial crisis continues to ripple through the global economy through 2009 and 2010; the focus should be on creating a system that is sustainable, which means that the needs of workers should precede those of Wall Street.

    It would appear that the IR situation will not improve for workers here any time soon, as the power imbalance between workers and employers is continued.

    I keep wondering what it is actually going to take before our ‘leaders’ realise their pet economic ideology has failed.

  45. Hmm messed up the blockquotes somehow…sorry.

  46. Tracie

    I don’t think our leaders will realise. Afterall – they are not part of the workers anymore.

  47. The ills that the competition reforms introduced by Keating were intended to cure were very real. Unfortunately the cure itself had side effects, particularly where the utilities were privatised without effective regulation, sufficient competition or an established market. Many developing nations had privatisation forceed on them by the IMF and World Bank in the 90s and almost all are now buying back their utilities from bankrupt operators due to these failures.

    Something to chew on though …

    The problem we have now though is that there are private operators in the market (electricity in particular) who are significantly disadvantaged by the subsidies provided to the public operators in the past. NSW is really the last State in this boat as the other States have passed on many of these costs to the private sector through sales. Accordingly, the prices we are now seeing in Qld and Vic more accurately relfect the real cost of providing the services (with a profit slapped on top). Given that it is the Private operators who are the main investors in renewables and gas, this competitive disadvantage is stifling investment.

  48. Dave55 – I’m wondering whether you’re a Jewish Rabbi? – Every time I see your photo it gives me that impression.

  49. Tracie and joni,

    To be fair, the current mob are better than the last lot on this front. When the opposition come a=out and say workchoices would save jobs, they are acknowledging that WC allowed employers to screw down workers wages.

    It is a point well made though Tracie, the less the employees have to spend, the less the service sectors can grow. The question is whether or not people can be happy with their lot in life …
    Labor had it right and the Libs had it wrong when they focussed on productivty gains delivering growth rather than extra cash in people’s pockets. Increased productivity keeps a cap on inflation allowing wage growth to be kept down without adversely affecting peoples ways of life. Economic growth is only bad if it comes at the expense of inequality (both intra generational as well as intergeneration) which include natural and social resource degredation. Productivty improvements through innovation etc are a key means of acheiving this (and they make life more interesting as well). Tjhis is a key aspect of real sustainable development (ie, not the meaningless rhetoric version).

  50. John

    LOL – no, my comments over at Blogocracy on religious topics should have put those sorts of ideas to rest. The phot is actually y from a 1920’s party – I suspect that I’d had a few beers by that stage as well.

  51. Dave55

    Your two paragraphs @47 are so conflicting of each other. Will we be like the developing nations and be forced to take over the assets again once all the profit has been taken. We only need look at public transport in VIC to see the final outcome.

    I still mantain that services essential to the whole community should not be profit driven. They should be break even and driven by a service to the people of Australia rather than a service to a few thousand shareholders.

  52. Shane,

    I agree, there is conflict between those two paras. I simply wanted to point out that public ownership is not without its faults, as is fukll privatisation. I believe the balance is somewhere in between but only where the market is sufficiently robust to allow market forcess to deliver the efficiency improvements at least cost.

    In the case of some utilities and services (public transport for example) I believe we would be in the same situation as developing countries and therfore these shouldn’t be privatised. In others though I believe that our markets and regulatory systems are strong enough (electricity and telecoms for example). However, in both cases, the cable infrastructure should remain in public ownership and be subsidised for regional areas. Rental could be charged to pay for upkeep and new infrastructure upgrades.

  53. Joni, so we’re all OK with that?

    If they cannot change their ideology to suit the very real changed circumstances, then what good are they?

    What was that about paying peanuts and getting monkeys? We’d probably do just as well with the monkeys and it would cost the taxpayer a heck of a lot less.

    Or maybe they are just getting what they can before the whole thing comes crashing down. I wonder what the odds are of the US going bankrupt in the next decade?

    The US could become a very dangerous place to be, all those angry citizens running around with their constitutional firearms.

  54. Tracie

    Oh no – definately not OK. How do we go about fixing it?

    I was reading (been doing a lot of that lately in hotel bars) that one of the reasons that China is so concerned about the GFC, is that their middle class will start to lose out on the benefits that they have gained in the past few years (such as health care) and when the factories start closing they will be left without a safety net. And this could cause a problem for the ruling party much much greater than the 1989 uprising. And it could be something that the ruling party cannot control.

    Another point to ponder about China is the similarities between them and the US at the start of the great depression. Both being big exporters with large foreign reserves. And the foreign reserves did nothing to save the US from the harshest effect of the great depression.

  55. Interesting post on the electricty privatisation issue over at Jack the Insider if anyone is interseted (particularly in Keating’s view of the failed privatisation):
    http://blogs.theaustralian.news.com.au/jacktheinsider/index.php/theaustralian/comments/keating_lets_the_sparks_fly

  56. I’m interseted Dave, might take a look.

    The Opposition Orifice says that Greg Combet, Gasp, shock, horror has had something to do with Labor’s IR policy esp. the adoption of the new low-paid bargaining stream (which in the headline has become pattern bargaining clause) Business are FEARFUL!

    Greg Combet responsible for pattern bargaining clause:

    http://www.theaustralian.news.com.au/story/0,25197,24743416-5013871,00.html

    OMG, not Greg Combet!

  57. The Opposition Orifice says that Greg Combet, Gasp, shock, horror has had something to do with Labor’s IR policy esp. the adoption of the new low-paid bargaining stream (which in the headline has become pattern bargaining clause) Business are FEARFUL!

    Greg Combet responsible for pattern bargaining clause:

    http://www.theaustralian.news.com.au/story/0,25197,24743416-5013871,00.html

    OMG, not Greg Combet!

  58. Dave 55, this ‘at least the ALP Govt are better than the last lot’ line is starting to wear mighty thin.

    If they cannot learn from the mistakes of both ALP & Lib Govts when the failure of such is so obvious and act, then they could not possibly be ‘better’.

    I do not agree with any degree of privatisation for essential infrastructure such as roads, electricity, water, and telecommunications. These services are essential to National Security and should always remain in the hands of the nation.

    The same applies for health, education and public transport. Whenever their is private involvement costs inevitably rise. It is true they may also rise in public ownership, but not by nearly as much – no execs or investors to pay out.

    Privatisated industries still seem to rely heavily on the public purse, so surely they fail free market principles anyway. The public is twice the loser as they lose the asset (and any profit), as well as paying more for the same or less.

    Private enterprise should be able to make more than enough money in other areas to keep them very well indeed.

    Why is it important for corporations to have a hand in everything?

    The current economic system has as many faults as extreme communism but many seem to be in denial, and the solution is more of the same.

    What’s the bet the infrastructure boost by the Govt will consist mainly of public-private partnerships?

  59. sorry for the double post, first it was so slow and didn’t go through, then said it was duplicated, although no post appeared, then both appeared!

  60. I do not agree with any degree of privatisation for essential infrastructure such as roads, electricity, water, and telecommunications. These services are essential to National Security and should always remain in the hands of the nation.

    The same applies for health, education and public transport.

    Fully agree Tracie – whenever privatisation or de-regulation occurs, we are told it will be cheaper for the consumer – but it never gets cheaper, not in Australia anyway!. Sick of investors here getting rich off the taxpaying public. Sick of private education and private health getting money from taxpayers to fund their ‘upper class’ ambitions.

    Telstra should be split into wholesale and retail, that would have fixed the problem we have with the company now, but in their wisdom the Howard govt. would not do it. Now Telstra won’t come to the party because they are scared that they may be forced to seperate and their shareholders would lose out – well, so they should. Just split it up and get things moving!

  61. Interesting post alright, Dave55

    From Jack’s Blog…

    …And let’s not forget that electricity privatisation has occurred in both Victoria and Queensland. The sky has not fallen in north of the Tweed or south of the Murray. Indeed in these states, costs to consumers have fallen due to the existence of competitive markets…

    Does Jack live in Australia? In Queensland the COST of ELECTRICITY has gone UP…UP and (wait fer it!) UP – where do they get their info from?

    …why don’t they read Blogocrats?

    …re the letter, I could just see Keating…

  62. 58. TracieofFNQ

    Yes! Tracie, good post…certain functions MUST remain in the hands of the nation.

    Broadband is a classic – if we still owned the infrastructure we just might have a reasonable network – as it is the bloody thing is controlled by an overpaid, egotistic Robber Baron, who’s not even a citizen…does he care about Australia’s infrastructure or his $12 million a year – tricky question that, hey?

  63. Joni, I’m pretty sure we can’t do anything about China, the US or anyone else but Australia.

    What can we do? We can start demanding of the Govt why they are so blind to the failure of this system they seem hellbent on continuing for all they are worth.

    It is only natural the opposition are still caught up in the past, but they are hardly relevant, being in opposition. The Govt could do a lot to fix things, but if they won’t simply because they are still pursuing failed policies foisted upon us by the likes of the IMF, then it is clear it is not OUR interests they are serving.

    If our politicians are unable to serve us, we should stop supporting them, maybe it is time for a whole new political movement.

    One thing is certain if current policies continue it won’t just be the middle class in China feeling the pain. Some here are already feeling it. Unfortunately I think things may get much, much worse before they get better.

  64. Thanks TB

    I found this link this morning

    http://business.theage.com.au/business/another-brisconnections-bolt-from-the-blue-20081125-6his.html?skin=text-only

    I’d like to know what possessed the ASX to allow such securities to be listed.

    Or perhaps they just dont care about non disclosure to retail investors.

    As far as I can see the broader question is the extent that these type of securities undermine retail investor confidence in on line purchases. Especially in these times

  65. Tracie,,

    I don’t think that I disagree with you on the privatisation of infrastructure (or at least not the cabling and wires for telecoms and electricity). But you argument about national security being the reason is complete rubbish. The commonwealth has massive legislative powers regarding defence and can take over private infrastructure if needed for defence purposes.

    As I identified above, the issues are massively complex, particularly where government entities do not have a monopoly on the service being provided (as is the case with electricty and telecoms). Full privatisation os State assets isn’t the answer, but then again, continued government subsidies aren’t either, particularly when the cost of doing this (when the private sector can and is willing to provide these services) comes at the expense of providing other essential service.

    I would much rather discuss possible solutions to this problem including privatisation options rather than simply rule that option out based on some failures of different options.

  66. TB

    We can’t expect electricity to stay the same price forever, particularly if we want to have more solar, wind and lower carbon options in the mix. Electricty prices should reflect the true cost of supply with extrernalities such as pollution costs factored in. The Qld Government mandated a certain % of electricty that mst come from gas. This has pushed up the price. Furthermore, most coal powered generators in Vic, NSW and Qld have come off their old heavily subsidised coal prices and mnow have to pay market prices. This has pushed up the costs of supply in all three states significantly. Add to this the increased price of copper, steel and other inputs as well as labour shortages (with consequential additional overtime costs). Lower water levels and subsequent decreases in the amount of hydo in the mix hasn’t helped. It all amounts to increased costs of production and supply and that can’t be simply put down to privatisation.

    If it helps at all, our electricity prices here in NSW have also gone up and we don’t have privatisation to blame.

    BTW, I don’t agree with privatising everything, rather, I just think that some of the knee jerk reactions here against privatisation haven’t really looked atthe full complexities facing the electricity industry.

  67. Dave 55

    The true cost of providing any infastructure is 1) Wages 2) Maintenance and 3) Construction. Anything above this is profit. The problem with privatising assets is that private enterprise also factors in a return on assets and bases this on a percentage return. If they do not achieve the expected return then the asset is disposed of or costs are increased sufficiently to achieve the expected return. Hence the reason we are seeing a 14% increase in QLD.

    When the asset is publicly owned why is there any need to achieve a return. if the set up cost comes from tax payers funds and it can then generate sufficient returns to keep functioning and provide funds for development then there is no need to privatise it other than for ideological reasons.

    The main problem with electricity assets in all states was state governments mandating that they provide a return to the governments and the governments then syphoned hundreds of millions of dollars in dividends into their coffers. If they had just left them alone they would have had billions for development, provided cheaper electricity.

    Its like Australia Post. It costs the government nothing to keep it and it gets hundreds of millions of dollars in dividends. other than ideological reasons why would you sell it?

  68. Dave55 a pissed Jewish rabbi from the 1920s LOL

  69. Full privatisation os State assets isn’t the answer, but then again, continued government subsidies aren’t either, particularly when the cost of doing this (when the private sector can and is willing to provide these services) comes at the expense of providing other essential service.

    But the Govt continues to subsidise the service even when it is privatised, like I said. So taxpayers wear the cost, but accrue none of the supposed benefits.

    Dave common logic suggests that if privatisation has failed us so far, so it is hightly unlikely to become our saviour anytime soon.

    Why pay taxes if Govt can’t or won’t provide infrastructure? That’s the reason we pay them, NOT to prop up unprofitable private ventures which DO NOT benefit the common people.

    Personally I preferred it when we owned the countries assets not corporations. If the Govt can’t be bothered or are not capable of providing the services maybe we should ditch the lot of them and put in people who can.

    If private enterprise cannot exist without Govt handouts then it is false to claim that they do it better and cheaper. Why should our tax $$$ be ‘invested’ in private ventures that the taxpayer receives no return on?

  70. If it helps at all, our electricity prices here in NSW have also gone up and we don’t have privatisation to blame.

    Be thankful. If it were privatised you would more likely than not be paying a lot more.

    This attitude that more privatisation will solve our current problems (many of which have been exacerbated by privatisation and PPP’s), is exactly like claiming that more deregulation will fix the GFC.

  71. BTW, I don’t agree with privatising everything, rather, I just think that some of the knee jerk reactions here against privatisation haven’t really looked atthe full complexities facing the electricity industry.

    Really? What do you think should not be privatised and why?

  72. John, a pissed athiest Jewish rabbi from the 1920s

  73. Shane,

    Agree totally re infrastructure but then again, I don’t suggest that we sell that off. I also identified a profit component and, where it has been privatised, there is also generally a loan repayment costs included as well .

    With electricty through, or at least non-renewables, there is an additional cost in the inputs – ie, coal, gas, uranium. My point was that these costs have all gone up dramatically in the past 2 years or so and, given that these imputs are directly proportional to output, the cost of electricty will rise accordingly. These increases will occur regardless of whether or not the generator is privately or publically owned.

    The Keating reforms which triggered this discussion didn’t mandate privatisation, rather they required competition. The states generally acheived this through making state owned trading corporations and this improved the productivity greatly. The privatisation idea was simply taking this a step further and selling off assets.

    Re Aussie Post – it shouldn’t be sold. Simple reasonn is that it would fail the market test for succesful privatisation. Monopolies shouldn’t be privatised IMO.

    Commonwealth Bank and Qantas should have been privatised. Governments have no role in the provision of banking or airlines where the private sector already provides similar services and the privatised entities are likely to be profitable as well. Both have shown that they can do this.

    Agree with others above that Telstra should have been split into retail and wholesale and then only selling the retail sector. I also think that the same should occur with the electricity generators but not because it will improve the supply of electricity from these generators but because it will remove market distortions that hinders investment in cleaner technologies.

  74. If ever we needed proof that the stockmarket is easily spooked these days, today’s a great example:

    http://business.smh.com.au/markets/

    Overreaction ‘much’ to the low (but not unexpected) growth figures out today …

  75. Dave

    Unfortunately, Peter Beattie and Anna Bligh believed, PB actually stated, that prices would go down (an “average” figure of $150 was bandied about in Parliament) – I was railing against it then and have continued to do so – many of knew the price would go up – FYI the prices were increased 10% immediately so that the retailers could compete! ie give us a discount on our own money! Best we could find was 5% – see the problem?

    Every time a public utility is sold off “for better performance or pricing” its becomes a) worse b) more expensive ..

    …who’s pulling who’s…

    …the silliest thing I’ve come across in recent years is the Security Company guards on the main gate at Enogerra Barracks – seems even the army is privatising…

  76. Dave55

    “and this improved the productivity greatly.”

    Can you link to evidence of this?

    TB has a point about price increases. They are up about 1/3 in three years.

    In Queensland we seem to have an army of people going door to door offering the ‘best deal’ on electricity which comes from the same generator, down the same wires. I can’t for the life o me see how that contributes to greater efficiency.

  77. Dave 55

    The Commonwealth Bank existed against private banks for over 75 years before it was privatised. Its charter when I joined was to provide a service to the people of Australia and it it did this in many country towns as well. It also provided a dividend to the Government.

    Once it was sold its charter changed to making a profit for shareholers and because many country branches while being profitable were not achieving the stated required return were closed.

    Since privatisation of the Commonwealth Bank we have seen a reduction in the interest margin the banks made. However that has once again increased dramatically over the last six months. In addition we have also seen a raft of fees ( mostly unjustified) creep into banking facilities.

    I fail to see the benefits of the resultant sale of the CBA. Overall a loss of brnches in rural communities, a massive reduction in staff, poor service and terribly long queues. For what ? a few hundred thousand shareholders instead of its oiriginal charter being a service to the 21 million australians no matter where they lived.

    This is the same as Telstra.

  78. TB

    Promising reductions in price is just dumb. I have never suggested that privatisation of the electricty industry would result in lower prices, in fact I believe it should be the opposite. That said, I do support subsidies for people on low incomes (and pensioners).

    Nature 5
    I can probably dig up something but it will have to wait for later.

    As for the 1/3 price increase – here is a chart of the price of Coal in the US. Our prices have increased by a similar amount. As you can see, the prices have increased by well over 1/3 in that 3 year period so an increase in price of electricty by only 1/3 over the same time (taking into account total inflation of 10-12% over the same period) probably isn’t all that bad. The point I’m trying to make is that you can’t look at the price increase in isolation of other variables. Also, the Qld Models and the Vic models of electricity privatisation differ to the NSW model proposed. While we may be comparring apples with apples, there is still a difference between Jonathons and Granny Smith’s (and crab apples which is probably analogous to the Vic model).

  79. Commonwealth Bank and Qantas should have been privatised. Governments have no role in the provision of banking or airlines where the private sector already provides similar services and the privatised entities are likely to be profitable as well. Both have shown that they can do this.

    So why do we need to guarantee bank deposits if the banking sector is so profitable?

    Rather than increase competition smaller banks have been swallowed up by the larger banks, even more so in the wake of the GFC.

    So it appears private enterprise has failed on these two counts. Then of course there is the matter of fees which have steadily increased rather than declined. Banking most certainly has not got cheaper, nor has the service improved. It still amazes me that banks have the nerve to charge for ‘teller transactions’.

    Because there is no public competition (thanks to Keating), the banks prey on the captive public.

    Privatisation will never be cheaper, or deliver better services no matter how many times you say it is.

    Same applied to airlines. Why is it Qantas’s standards have declined so badly? Again if execs and investors did not need to be paid more money would be available to improve the service. Aussie jobs would not need to be outsourced, and we could have faith in the quality of ‘our’ airline.

  80. Shane,

    The reduced lending margins have more to do with increased competition over all as banks got used to deregulation. I posted on this over at Blogocracy some time ago. The increased margins (at least between the cash rate and variable rates) at the moment have more to do with increased costs of funding.

    As for the regional branches, I’m not sure that this argument really holds up. As lending margins decreased, the Cth bank would have had to follow suit. If it was the only local bank in a regional area, it is highly likely that that branch would have been unprofitable if it ran those reduced rates. As it happens, Australia Post and some news agents offer banking services in most rural areas where there are no banks. Apart from personal access to a bank manager (which used to be important when banks were regulated and getting a loan was difficult because the RBA cash rate exceeded the regulated lending rate), most banking services can be provided through ATMs and the Post office and now online.

    To argue that the added convenience of having a branch in a rural area is the only reason why we shouldn’t have privatised the CBA is IMO selling the rural industry short. After all, I don’t think that any farmer or business has ever argued that having the local bank move out of town cost them their business or farm (less convenient sure but not not insurmountable). Additionally, having only one local bank in an area greatly diminshes competition.

    At any rate, a large number of rural towns are now seeing banks return in one form or another and many credit unions expanded their branches to fill the voids created by the banks. The effective loss of convenience was pretty minimal in most areas.

  81. Bugger – forgot the link to coal prices:

    http://www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html

  82. Tracie, that is such a simplistic response.

    QANTAS services haven’t declined because of privatisation – if anything, we have greater services available due to Jet Star etc.

    As for the guaranteeing of the banks, – WTF has this got to do with the privatisation debate? Are you suggesting that having CBA (and State Bank etc) in public ownership would somehow have avoided a run on banks. The guarantee is there to stop a POSSIBLE run on the banks due to irrational fear. If people acted rationally at times like this we wouldn’t have needed the stated guarantee (there has always been an implied one). Furthermore, providing an unlimited guarantee is pretty safe because of the profitibility of our banks.

  83. Dave55

    Point taken about the rise in coal costs and other inputs. They have increased significantly.

    Still can’t figure out how all these retailers who buy at the same price and who ‘compete’ add to efficiency.

    It seems to me the only competition is in the ‘spiel’. Last week I was visited by one mob who claimed they were owned by the NSW government (the selling point) and my current supplier is owned by a NZ company (supposed to put me off) – the company is called Queensland Electricity.

    Seems like smoke and mirrors and highly inefficient.

  84. Dave 55

    Yes I was putting in the reduced margin as one of the few positives.
    If you think loss of banks in rural communtities did not hurt farmers or the towns then I think you may be a tad short sighted. Losing Banks meant loss of jobs and a manager ( who seems to be just as important to people these days as it used to be, see how BoQ plays on having managers in their branches with the majors now reversing a lot of their decisions on pulling managers from branches). More people travelling to the larger cities which then takes other shopping out of the local town.

    Of course no farmer went broke but having to drive a 400km round trip to see your manager rather than a 20km round trip is inconvienent and expensive.

    I was in the bank when branch closures happened on a large scale and it was to try and force people to do everything by phone, yet most services are still conducted face to face and this is a fact. Resistance to everything internet or phone call is still strong. So much so that the CBA is now putting business managers back into all of its branches after a disastrous consolidation of business lending into major and capital cities only.

    If some branches run at a loss and some make a profit and in the end the bank still makes a good return then so what, they are providing a service9 oh sorry that was when there was a social responsibility). Problem was as soon as the CBA went private every area was considered an indidvidual enterprise instead of the overall common good and profitability of the business as a whole. After privatisation of the CBA all the banks could not get out of country towns fast enough and wasn’t it funny that none of it happened until the good old CBA was sold off completely.

    Credit unions did move into areas but remember they do not do rural lending and very restricted commercial lending. They are usually home loans and personal loans. They do not have commercial and business banking representation.

  85. Dave on Qantas ‘sevices’ I would beg to differ. The safety record has taken a bit of a battering of late as well.

    As for Jetstar…cheap prices, no service, badly paid staff.

    I heard on one of the news programmes (would have been ABC) that one of the airlines was predicting that air travel may eventually become a two tiered service. Flights for business and 1st Class, and separate flights for economy.

    I wouldn’t feel to safe on one of those economy flights. They will probably at least try and put some effort into safetly on the 1st Class service – wouldn’t do to endanger rich people, the plebs on the other hand…

    What do you think the guarantee has to do with private enterprise banks? If they were so well run, and working as well as you say they would not need to be guaranteed. It’s astounding to think with all the profits they make, that they would need taxpayers to underwrite them, but there you go.

    Besides there is a fair bit still to play out in this crisis yet, and the US could have a couple of extra problems to deal with in the form of credit card debt and commercial mortgages which are increasingly in default.

  86. 81. Dave55

    …and ironic that Queensland is the largest coal producing state…making “bluddy ewge” profits…and I don’t get cheaper elecricity…

    83. Nature 5

    We too are with Queensland Electricity and had a tete’ a tete’ with them BEFORE we were even billed – over the account
    name and a couple of other issues – sent a letter to Melbourne after a couple of heated telephone exchanges with quite ignorant (in the true sense of the word) people regarding the legality of their contract – no acknowledgement, no reply at all but all the issues raised in our letter were corrected…nip problems in the bud before they bloom into disasters!

    85. TracieofFNQ

    …as I have said before Tracie, keep an eye out for the re/insurance industry…that will be significant…

  87. Shane,

    fair points, but I don’t know if privatisation was the cause or simply coincidental. Also, I admit that there was a regulation failure. There is no reason why banking licences couldn’t contain a requirement to provide a certain level of direct F2F services in rural areas. But again, I am not convinced that having a bank owned by the Commonwealth would have cured all of the ills you mention above. Much of the real damage done to rural banking occured in the mid 80s when CBA was still public (foreign currency loans anyone …?).

  88. But Tracie, QANTAS has been in private ownership for over 13 years. It is a Looong stretch to link privatisation to those recently reported safety isssues. QANTAS still has a safety record the envy of just about every other airline iin the world.

    To make my point, compare the safety record of NSW Ferries with QANTAS. Being in public ownership is hardly a guarantee of safety.

    As for Jet Star – you get what you pay for.

  89. TB Qld, like NSW and Vic used to subsidise the electricty industry by locking in v. low prices for coal. Both states stopped this practice in recent years (usually following the privatisation of the mines!!)

  90. “As for Jet Star – you get what you pay for.”

    True. But they throw in “attitude” free of charge.

    🙂

  91. Dave 55

    The CBA in the 80s also had a division called the Commonwealth Development Bank which lent mainly for rural development and projects which the traditional banks would not take on due to unusual or poor security. I remmeber the bank taking security over 8 camels for one deal. the Development Bank did not make much of a profit but it helped develop the nation for many years. This was closed down as soon as privatisation was commenced as it was considered too higher risk for private enterprise. Closing this avenue severly constrained development in many areas of the rural community and was closed for one reason profit.

    Simply stating that a government enterprise should not be in area which also conatins private enterpise is also short sighted as was revealed by the demis of the Commonwealth Development Bank.

    CEOs wages and management packages sky rocketed once the CBA was sold off as I have previously stated. Yet while the CBA was in government hands branches remainied open and salaries of executives was in far more correlation with the workers. This applied to all banks. To have all that change and not think it was a result of the sale of the CBA is putting on a few blinkers don’t you think.

    The real damage in the 80s was Interest Rates and not the Banks themselves. Rates are set by the RBA and Banks respond accordingly, thats all banks both private and government owned.

    With regards to Telstra ( or Telecom as it was known then). Telecom built the analogue mobile network while in public ownership. The analogue network was the best mobile coverage network in the world covering every inch of the country. However when the government decided to sell Telecom off it forced the company to prepare to close its network as other commpanies would not eneter our market due to the dominance of the Telecom network. Ask farmers in rural areas if there coverage is as good as it was under public ownership and analogue. Once again a service built by a public institution with money for high phone bills we paid at the time was forced close so private enterpsirse could come in and build a digital network. A major loss of a fantastic, reliable and FULL australiawide coverage network.

  92. Tracie @ 79 & 85 – Is there specific evidence that Qantas standards have dropped? Please provide it. I don’t believe your ill informed opinion. How many employees does Qantas have now? How many did they have 10 or 12 years ago? Specific exactly what has been outsourced.

    Too generalised, this is ill informed.

  93. Re: Tom @ 15

    How characteristically short-sighted, Tom (comment 15 on present). I think I was alluding to the nouveau wankers and their schadenfreude buying up status goods on the cheap to boost their…drumroll, please…statuses; and how there’s a common mindset in there somewhere.

    Anyways, the point I was making is that everyone’s on the same boat, whether they’re dining at the captain of industry’s table, or sweating it out in stowage class. I think Tracy of NQ made the point elsewhere that the working poor were barely keeping their heads above the plimsoll line of debt even at the best of times, and will now be the happily unemployed poor losing their status goods overboard, like homes and economic security for their children.

    Moving on,let’s follow your own logic through and compare it to my previous statement (comment 31, previous). Let’s assume there’s a primary market for status widgets. Let’s further assume that there’s a secondary market for the fire-sale of second-hand status widgets. What happens to the producers of said status widgets for the primary market, the value of their brands, their likelihood of continued production, investments in R&D, and employment of workers? What happens to sellers previously operating in said secondary market? Apparently, a glut in a secondary market erodes value in both the primary and secondary markets. That would be where the lower prices hail from in both primary and secondary markets, but those deflationary prices seem to come with unacknowledged social costs.

    An example from today’s news, to illustrate the point that I was making about knock-on effects: Aston Martin cuts jobs. Hooray, the speculative wankers pretending they’re James Bond got what was coming to them; or, hooray, everyday workers lost their jobs? One has to factor in, also, that status goods like cars often include R&D into things like safety as a selling point, so no doubt reduced industry-wide expenditure on safety research and applications, as car manufacturers go to the wall, can only be a collective social plus, too.

  94. …a random reading of a thesaurus – above! Lots of very impressive words.

    Please note – how to express a simple proposition in a most complicated manner.

  95. I’m still struggling with an economic system that encourages people to spend rather than save – and the western governments are STILL encouraging people to spend rather than save – to HELP THE ECONOMY…

    …just what is our “economy”?

    …big business (eg oil, minerals, chemicals, transport, telecoms…), big banks, big retailers, big insurers, big management funds, big media outlets, big sporting industries, big governments…

    …who actually pays?

    The LITTLE people – time for for change…

    …have you noticed that the call for CEO payouts and greed is slowly waning…wonder why?

    Peasants and Robber Barons! As we spiral down, we are still being conned!

    How’s this for a radical idea – what about a world coinage – everyone uses the same denomination – no farting about with buying an speculating on nothing at the expense of others

  96. This may interest you, TB, insofar as it addresses the idea of a common transactional currency and the building in of automatic stabilisers for uneven developments in trade and in debt: Keynes is innocent – the toxic spawn of Bretton Woods was no plan of his

  97. TB
    ’m still struggling with an economic system that encourages people to spend rather than save – and the western governments are STILL encouraging people to spend rather than save – to HELP THE ECONOMY…

    There is a third option of course which is a combination of the above. And Don’t forget that one of the key reasons Labor introduced compulsory super was to increase Australia’s savings.

    Unfortunately, we don’t all live subsistence lifestyles and we need to barter to get the things we don’t produce ourselves. The chance of us turning back the clock 3-4000 years is probably pretty remote.

    I just realised the above could come across as a bit sarcastic- not intended TB, I take your point seriously and agree to a point, it’s just that I guess I’m trying to point out that ultimately we only save to spend anyway, what I think you really have a problem with is borrowing to spend (but I could be wrong) and ultimately that, I agree, is totally unsustainable.

  98. Tom M, I really don’t care what you think of me. Qantas ain’t the airline it used to be, and regular travellers will have noticed a difference.

    Some people will always deny climate change, and some people will always support privatisation and extreme capitalism, I suspect those who are benefitting in some way.

    The problem for you is it is rather like Howards claim that we ‘never had it so good’. Those who were doing it tough knew it was a lie.

  99. Some people will always deny climate change
    98. TracieofFNQ | December 3, 2008 at 10:46 pm

    Please tell me who denies climate change??? The climate has always changed. Greenland was not called “Greenland” for no reason.

    The question is, is climate change due to human activity???

    Also last time Labor was in power there were 11% of aussies unemployed. Guess what i was one of them. at this time I also had a mortgage with an interest rate of 18%.

    Tracie- you can get you opinions and stick them where the sun does not shine.

    Ps. I have heard the NSW Labor ( ie Nathon Rees) has just privitised the prisons.

    Please tell me is there anything left that NSW Labor hasn’t privitised???

  100. Oh God, who let you out of your cage?

    Maybe when you can learn some manners you might be worth engaging with, until then….

  101. Tracie, I just don’t think you know anything about this industry. You make up stuff about standards, without knowing what the standards are. You comment about “Jetstar…cheap prices, no service, badly paid staff” How much are they paid? Award, below award, what???

    And …”They will probably at least try and put some effort into safety on the 1st Class service – wouldn’t do to endanger rich people, the plebs on the other hand…”

    Do you really think there is enough aircraft capacity to have dedicated first class airlines? Do you really think that there are different standards of aircraft maintenance applied on different aircraft within the one fleet?? Ignorance of this industry is again evident.

    Also… “Aussie jobs would not need to be outsourced” – which jobs exactly have been outsourced by Qantas?

    It isn’t that I have a particular opinion of you, it is just that you express such remarkably uninformed opinions so often.

    And Legion, you are the most capable one handed typist I’ve seen! Obviously one handed, because your other one is fully occupied.

  102. Maybe when you can learn some manners you might be worth engaging with, until then….
    100. TracieofFNQ | December 3, 2008 at 11:20 pm

    You said that people have denied climate change. Please tell me who???

    As I said, Greenland was not called Greenland for no reason.

    I also do not enjoy being unemployed. last time this happened was when your heroes the ALP were in power.

    OK, your heroes are now in power. They signed Koyoto. Please tell me what they have done since.???

    Do you think it is possible that they said they would sign it just to get your stupid vote.

    After having got your vote the ALP will now throw you on to the scrapheap.

  103. Tom M, I know what the standards were, and what they are now. Constant travel does familiarise you with these things.

    Tell you what, why don’t you prove me wrong.

    I’m not going to the effort of dragging up information for you, because you never do. Despite all the info I provided for you on the ABCC, I had to rely on your ‘feelings’ on the matter. Fat chance.

    And you have the cheek to call me uninformed!

    Besides I don’t think I have to convince others. If they are travellers they can (and probably have) judged for themselves.

    You can say the sky is orange until you die of old age, but it will still be blue.

  104. Tracie,

    I am another frequent traveller who will not fly with Qantas if I can help it. In the past two years of travelling around SE Asia, the planes to/from Manila are old 767 with no personal entertainment. The food is poor and the reliability is extremely poor.

    I now choose to fly with SIA for the same cost, even though I have to fly longer and through Singapore, just like my flights tomorrow back to Sydney. I get better food, better reliability and better entertainment. I arrive feeling a lot better than a QAF flight.

    Qantas used to be good, but that has definitely changed in the last couple of years.

  105. Neil this is NOT the climate change thread, we did that a couple of days ago.

    The point was there will always be people who can’t see a problem no matter what the evidence. There does come a point when it is a waste of ones time to continue trying to convince them otherwise.

    Likewise conversing with people who clearly have no idea what they are talking about. The ALP my heros? You clearly haven’t been following the discussion. But I haven’t completely given up on them YET.

  106. Exactly Joni, and as I said safety has been a bit of a worry of late.

    Are you glad to be coming home?

  107. Exactly Joni, and as I said safety has been a bit of a worry of late.
    06. TracieofFNQ | December 4, 2008 at 12:03 am

    Please tell me when is the last time you have flown with Aeroflot???

  108. I also do not enjoy being unemployed. last time this happened was when your heroes the ALP were in power.

    Don’t blame anyone else. If you were unemployed it was your own fault. If you are ever unemployed again it will be your own fault.

    Blaming the victim is an article of faith for conservatives. Try and be consistent, even if you can’t be logical.

  109. Don’t blame anyone else. If you were unemployed it was your own fault. If you are ever unemployed again it will be your own fault.
    108. Caney | December 4, 2008 at 12:36 am

    Actually it was Keatings fault. i actually find very strange your comments. I seem to remember you saying double digit unemployment way back in 1982 before a lot of people were born was John Howards fault.

    Now you are telling me all the people who were unemployed when JH was treasurer in 1982 was the fault of the unemployed.

    PLEASE MAKE UP YOUR MIND

  110. I seem to remember you saying double digit unemployment way back in 1982

    In context, I said that Howard presided over:

    double-digit inflation
    double-digit interest rates; and
    double-digit unemployment

    The only Treasurer in history to have presided over all three indicators in double-digits simultaneously.

    And he left office with the three indicators worsening.

    Actually it was Keatings fault

    So what happened to the conservative dogma about personal responsibility? Dropped that now?

    PLEASE MAKE UP YOUR MIND

    Indeed!

  111. The only Treasurer in history to have presided over all three indicators in double-digits simultaneously.
    110. Caney | December 4, 2008 at 12:54 am

    Actually the double digit unemployment wasn’t for very long. I think it was about 8 months of DD unemployment in 1982. But guess what ?? The US also had DD unemployment and the US is generally a low unemployment country. The 1982 recession was a bad recession.

    However under Keating when we had DD unemployment for 28 MONTHS. Unemployment in the US was around 8%.

    Keating made the 1992 recession worse because of his stupidity and the people who voted for him.

  112. Neil, stop trying to worm out of it. If you were unemployed it was your own fault. If you are ever unemployed again it will be your own fault.

    As a conservative you have no one to blame but yourself. And you get no sympathy from anyone.

  113. Neil

    Have you come over from Piers Akerman ?

  114. Tom of Melbourne

    A bit of history about Jetstar.

    There was another low cost ariline operating during the compass era which had a cockatoo as its emlmblem but for the life of me I can’t recall its name at the moment.

    This airline mainly flew to Newcadtle and some other country towns. It was struggling and faced bankruptcy. This airline had very basic employment conditions and nearly all part time staff on low wages and conditions. Much much lower than the conditions provided b y QANTAS.

    QANTAS took over this airline and closed its operations down. It did however keep the shell of the company and the employment conditions that came with the company. This companies name was changed to Jetstar and all employment conditions of new employees started and still remain under the employment conditions of the previous airline. This is exactly how QANTAS managed to circumvent employment conditions it currently paid to its QANTAS staff. Pretty sneaky if you ask me.

    So yes Jetstar staff are paid significantly lower than QANTAS staff and receive next to no benefits exisitng QANTAS staff receive. That is why routes are being dropped by QANTAS and replaced by Jetstar. However please notice that routes on which our majority of politicians travel inside australia are still operated by QANTAS, funny that.

  115. Tom

    Found the name of the Airline. It was called Impulse airlines.

  116. So Shane, let me just ask a few questions – are employees of Jetstar on award rates, above award, below award? Are the trades employees on a union agreement?

    How do their rates compare with Virgin? Or the ultra low cost subsidiary of SIA – Tiger? As an example of commitment to the future – how many apprentices (for example) does Virgin or Tiger employ?

    Jetstar is intended to compete with low cost carriers, but you’d have it loaded up with costs that would ensure that it could not compete. You’d have them and Qantas slowly die, and the hungry, low cost overseas owned airlines take up the Australian market.

    Tell me where the sense in that is??? There is no sense in your position, it is just the type of emotional criticism that some like to fling at a good Australian company. One of the few that continues to employ significant numbers of apprentices, one that maintains about 30,000 jobs in Australia. It is a company that competes with the big international airlines and their ultra low cost subsidiaries, but still maintains good wages and conditions for its Australian workforce.

    Tracie, you mentioned safety. How have the safety standards changed in Qantas?

    Joni, your issues relate to in flight entertainment and catering. Qantas remains one of the very few airlines to EMPLOY IN HOUSE CATERING on airline industry employment conditions. They would probably get better quality at a cheaper price if this was a service that they did actually outsource. But then we’d have Tracie whinging about outsourcing!

  117. But Tom – It would all be better if it hadn’t been privatised – clearly you can see that 😉

  118. Shane

    Re the Development Bank – I full agree that that type of service should be provided by Government as the private banks won’t touch it. But that doesn’t mean the commercial arm of CBA should have remained in public ownership.

    Just like Telstra should have had the retail and infrastructure arms split, the same could have occured with CBA and it’s development arm.

  119. Tom

    I was simply pointing out how Jetstar was created and the sneaky way it was done.

    In relation to Low Cost. the cost of Aircraft, maintenance and any other costs should be exactly the same for both full service and low cost airlines. If they are not then safety has been compromised.

    So Low Cost can only mean two things. Lower Wages for employees or lower standards of service plus charging for items that come free on full service arilines.

    Jetstar is not only intended to compete with low cost airlines it is also intended to gradually swallow up QANTAS routes which originally we were promised it would not do.

    Apparently QANTAS is already slowly dying. Its percentage of International traffic to and from Australia is declining, so despite making massive profits it seems customers are none too happy with the levels of service QANTAS now provide compared to the other full service airlines.

    What is amazing is that you have an airline making 1 billion dollars profit in an industry where most are making losses and yet they still scream its not enough and they are going down the tubes.

    Geoff Dixon waged war against the employees form day one and has done exactly the same as most big companies. Told staff during good times that they have to remain competitive and sacked staff while raising management wages. Then when bad times hit says exactly the same thing and still gives management massive pay rises. It is a ploy by Management to keep staff on edge. Ive been through it myself, the spin provided by bosses which is scripted from the top would even make politicians seem tame.

    Please don’t tell me they need to pay competitive wages for the best bosses because they are all fleeing from eveywhere with their golden handshakes now that things are tough. Shortsighted short term profit with massive gains to CEOs that is all that has happened over the last 10 years. A gravy train.

  120. Dave 55

    Why would you want to split or sell a publicly owned company in the first place that provides a service to the whole of the country simply to provide an income for CEOs and Shareholders at the expense of the community. Its charter and the reason it was originally created completely changes.

  121. But Shane, the provision of those services are at the expense of the community when owned by the State. It’s is a matter for Government to work out whether that State money (in the capital value) is best used to provide services already provided by the private sector (and possibly introducing price distortions into the market because of the State involvement) or whether that money would be better used to free up capital and tax revenue for other services which are not being provided by the private sector.

    Both you and Tracie seem to be working at this from the perspective that, as long as the public entity makes money for the Government, it shoudln’t be sold. I’m not saying it should be sold, but rather that selling it should be an option in certain circumstances and I’ve set out what those circumstances are. There is clearly a role for Government in providing services, not not where doing so causes greater harm.

    This isn’t as black and white as you and particularly Tracie are making it out to be; that’s my point.

  122. Dave 55

    I agree with your analysis on many points.

    The only problem is once you have sold the asset there is nothing left. You get a one off windfall which is then spent and you have nothing left in the kitty.

    If the CBA was not sold and yet still ran like it is today the Government would be getting billions of dollars in dividends each year. That is the logic I do not understand.

    Econimists at the time were saying governments should get out of banking because it is high risk. Well the whole world is now paying for the high risk private banks took around the world. So much for that theory.

    The same with Telstra. Once sold the regular income dies for the sake of a one off gain.

    Why sell something that creates income for the government, to provide services that do not. Where does the money come from lateron to provide those services once the one off funds are exhausted.

    Better to allocate regular income to the maintenance of those services.

    Sale of public assets should be subject to a referendum instead of ideology and this goes for both sides of politics.

  123. Shane

    The only problem is once you have sold the asset there is nothing left. You get a one off windfall which is then spent and you have nothing left in the kitty.

    Absolutely, which is why the decision to privatised has to be made having regard to the loss of income stream and potential income stream from the use of the funds (or, if paying off debt, the interest savings). And don’t forget that the Government does get revenue from private companies once sold through company tax, payroll taxes, GST, income tax and CGT when shares are sold at a profit.

    The decision on what to spend the proceeds on is a political one. In an ideal world, we would use it to create further income generating revenue for the Government or at least reduce the future burden on Government and taxpayers. Investment in infrastructure for example won’t generate revenue in itself but it will (or at least should) improve productivity which will flow through into revenues.
    If the reason to sell of the CBA was based on it being risky, well that was just dumb, but as far as the commercial aspects of the bank are concerned, I hionestly believe that the Government had no role in providing those services while others in the private sector did and accordingly the Government could use the proceeds for better (hopefully) uses. I guess I’m talking theoretically here and assuming that Governments will apply taxes and revenue to their best use, of course the cynic in me knows that this is crap but I firmly believe that you should completely disregard policy options simply because of a cynical view of Government.

  124. Dave 55

    The government gets payroll taxes, GST, income tax, council rates and state government taxes when it is government owned as well.

    I agree in an ideal world we would use it to create further income generating revenue for the government. Problem is anything that remotely makes income for the government is or has been sold off under pure ideology in the belief it can be better run, managed and resourced by private enterprise.

    Why does the government have no role in providing a service if that service is not provided adequately for the whole community no matter where you live, simply due to the profit determination of private enterprise for each individual location rather than as a whole ?.

  125. Why does the government have no role in providing a service if that service is not provided adequately for the whole community no matter where you live,

    I don’t think I have ever suggested that and agree that should be a guiding consideration. But even Government provided services get cut back in regional areas when funds get short – hospitals, post offices, Government extension offices etc. Keeping something in public ownership is no guarantee that it will continue to provide services to the whole community in a readily accessible form.

    I guess that’s really what I’m trying to point out; I think there is a tendency to look back at privatised industries to their public days with rose couloured glasses and overlook what is likely to have happened to them in the intervening period (having regard to other public entities) and the regulatory and market problems associated with having a public entity competing with private entities.

  126. Investment in infrastructure for example won’t generate revenue in itself but it will (or at least should) improve productivity which will flow through into revenues.

    Beg to differ, Dave, ever hear of toll roads/bridges – ports and railways can also generate revenue – QR (Queensland Rail) is a classic example…

    The problem most government run utilities have is poor management…if private enterprise can do it…so can properly operated/managed government entities…privatisation for profit is a myth perpetrated upon politicians with no business experience and fairly naieve expectations…the poor buggars can only think six months ahead – max…power, water, health, education etc should be not for profit enterprises…

  127. Dave 55

    But why is there now regulatory and market problems associated with public and private entities existing in the same market, when this was not a problem for the previous 75 years. The only regulatory and market problem I see is the private sector screaming for the government to get out, simply to achieve their own agendas of creating a private duolpoly or monopoly in lieu of a government one.

  128. TB

    There are plenty of good examples of tolls being used to pay off the investment – Sydney Harbor Bridge/ and the old Berowa Toll Gates for the F3 (remember those?).

    There is no reason these things can’t make a profit in the long run and I am fully in favour of tolls on roads provided the improvements the roads deliver is equalt to or exceeds the toll cost. I am one of the few who actually think the Cross City Tunnel in NSW was a good idea (Just poorly implemented).

    I don’t think the PPP model was ever suggested as being the only way to make something profitable, rather, it was a way for Governments to have private enterprise pick up some of the initial cost of providing the infrastructure. Overall I would say that PPPs have been rather unsuccessful in Australia but the M5 (not M5 East) M4, M7 and M2 in Sydney are probaly reasonable success stories. The biggest problems with these developments usually lie in the short sighted nature of the project (ie, too few lands and little room for expansion). This is a failure of Government rather than the Partnership.

    I have said before that the thing I most blame Howard for is demonising Government Debt. States should be able to use borrowings to provide infrastructure. If tolls are then used to pay it off, it actually means that the generations that use it pay for it rather than the tax payers of today. Howard effectively forced Governments into PPPs and transferred the debt burden to the private sector rather than public (and we see where that has got us!!)

  129. Shane

    Conflict of interest for one. With Banks it wasn’t such a problem because the industry was so heavily regulated up until the 80s but after this it did become an issue (or at least a potential issue).

    The market distortions are everywhere, but most notable in the electricity industry. New entrants must compete against existing Government operators who have no capital construction overheads and preexisting distribution networks. Coupled with this are the creap long term coal contracts and renewables jsut can’t compete because the palying field ios so heavily stacked in favour of the Government generators. There is a lot of research on the failure of solar and wind power in California (introduced in the early 80s) that looks at this.

  130. et me just make myself clear here, I dodn’t advocate privatisation accross the board. I do think that privatisations and private investment in services used by the public should be a tool in a very large kit bag or other tools to be considered by Goverments when choosing the right tool for the right job. There are privatisations that have been done very poorly in the past (perhaps even the majority of them) but we can, and should, learn from these failures in the future and not simply desreagrd an option simply because it was misused in the past. It’s a bit like saying a spanner is useless because it couldn’t undo a screw. Of course it is if you are talking about screws but not if we are talking about nuts and bolts. And just like spanners and nuts, there are different sizes for different nuts, just like there are different private invest models for differrent services.

  131. Dave 55

    Taking electricity into account. Isn’t the spot price market a result of private enterprise as you have more than one bidder whereas when it was fully government owned there was no need for a spot price as there were no other bidders.

    I know and acknowledge other costs such as coal, however when pricate enterprise has to out bid each other in a spot market we are creating a cost that did not exist before which now also has to be passed onto the public even if the cost is smoothed over a 12 month period.

    Is this not a private industry created distortion.

  132. Dave, its not the spanners or screwdrivers that get in the way but the untrained people trying to use them…no competency requirement for politics (more’s the pity) and it may be just me but a 20 or 30 something just ain’t got the life/work experience to understand what’s going on…

    …as for (over) tolled roads and bridges (lets go back to the Dark Ages again…originally invented for kings to raise money to go to war) this has a big impact on the restriction of movement for people with fixed and/or limited incomes…once the capital is paid off, then it should only require maintenance – not if its a 99 year lease or owned by private enterprise – it simply becomes a golden goose…and that’s what politicians and beaurocrats don’t seem to understand…it should be the taxpayers (tollpayers) golden goose…but they just keep getting cooked…

  133. Shane

    Is this not a private industry created distortion.

  134. Look Shane, if Qantas had wanted to establish a low cost subsidiary on the basis of low wages and poor conditions, it could have easily utilised the various employment instruments available under Workchoices.

    AWAs, non union agreements, employer greenfields agreements etc were all there for it to choose from.

    It didn’t choose to do this. The reason it utilised the previous airline, was because it had cleared the various regulatory hurdles for flying in Australia.

    Qantas provides jobs, apprenticeships, it even continues to employee cooks, kitchen staff etc to prepare meals for the airline customers. You ought to encourage outsourcing of this in particular, you’d probably then get a decent meal.

    Qantas has a range of regional airlines, all with different employment systems. Jeststar is simply a brand that is better known, firstly because the others are called Qantas Link (eg), secondly because it is the brand that Qantas has chosen to expand in the tourist market, to compete against the foreign owned companies that you & Tracie seem so eager to succeed.

    I think it is particularly poor to talk down this company, while excusing by silence the foreign owned competitors that have no base here, and no commitment to maintain operations here.

    By the way, please tell me exactly how Dixon “waged war against Qantas employees”. He did no such thing, he sought wage settlements in line with many typical outcomes in union agreements.

  135. Dave 55

    That is a question.

  136. Tom

    Workchoices did not exsit when QANTAS created Jetstar.

    Why would QANTAS need to clear regulatory hurdles for flying in Australia when it already flys in Australia?

    Outsourcing is not the holy grail to better service or productivity Tom. Simply ask the CBA about their outsourced IT contract under their previous CEO.

    Tom are you a QANTAS employee ? as yours comments regarding Geoff Dixon seem to appear scripted.

  137. Shane

    Is this not a private industry created distortion.

    How so? The retailers buy the electricty at the lowest price and the suppliers bid downwars to seel their electricty; the price goes up during peak supply because there are more bidders but don’t forget that the retailers are actually locked in to the prices they can charge so they will cap what their buy price is to minise losses (or maximise profits). The rice rises in Vic and Qld probably represent a truer cost of production than was previously the case. Subsidised electricyty is good but it hits a Government’s bottom line as well which means we all pay the real cost at the end of the day.

    The distrtion in the market comes from the publicly owned generators being able to undersell the private generators due to long standing subsidies and their flow on effect. I would have no prob with all electrcity supply being under public ownership but because we have private entrants and those entrants are in the lower emissions spectrum, there is an inbuilt distortion which is counter productive to the commercial uptake of these cleaner technologies.

  138. Tom

    Here is a link to a bit of history regarding Jetstar.

    http://www.mediaman.com.au/profiles/jetstar.html

  139. Sorry about the wierd post at 133. Somehow IE auto sibmitted on me….

  140. Dave 55

    I don’t consider a 14% increase in my electricity bill after three previous rises in the last 2 years one of which was 10.5% a cap in electricity prices.

    You know yourself that the spot price in peak demand in winter and summer by retailers far outweighs the drops when there is oversupply.

    Dave what are the long standing subsidies and do you know how much they are.? Also if the private companies were aware of these long standing subsidies why on earth did they build generators to compete against them, if they knew they could not match the price.?

  141. TB

    No arguments from me. It’s just that there seem to be a lot of tradespeople on this blog blaming the tools 😉

    As for the toll roads – no argument from me. Does that Logan Motorway still have about 30 (deliberate exageration but it seems like it) bloody toll stations on it?

    My preference would be for Governments to fund roads and rails through a combination of recurrent funding and debt and then recover the cost through either tolls or fares. Private investment isn’t really needed but, as I said, bloody Howard demonised public debt and everyone fell for it, and now we are paying for it.

    My point about the M2, etc is that they do a pretty reasonable job providing the service and the cost of use is reasonable provided there are corresponding travel savings. But that said, the cost had the public provided it would have been lower (after all, most of those tollways have to pay of their own debt (and in a pretty short time) and make a profit as well wheras a government funded road only has to pay off the debt.

  142. Also if the private companies were aware of these long standing subsidies why on earth did they build generators to compete against them, if they knew they could not match the price.?

    I’ve mentioned the subsidies in earlier posts.

    As for the why – mandated uptake through the MRET Scheme, NSW green electricty scheme and Qlds mandated gas scheme. In short – they rely on subsidies themselves it’s just that these subsidies are payed for by the retailers and passed through to the consumers. The failure in California was because these suppliers couldn’t compete when the subsidies were removed or there was a glut in the supply and the mandated amount was exceeded (this ahappened in Aus too with the MRET scheme because tha amount of renewables exceeded to mandated uptake).

  143. I flew to Sydney the other week for my nephews wedding and hired a car and used my Tom Tom to navigate.

    I had to go to the eastern suburbs first and took the toll roads. To my amazement on one of the toll roads there are no toll booths to pay rahter big signs warning that you have 48 hours to pay by calling a number otherwise you will be fined.

    I called the number and was told to visit a website to register my vehicles numberplate as a visitor, and by the way she mention it cost $1.75 to set up the registration.

    I then had to travel west and travelled on the M7 and guess what, the same thing applied. I had to ring another number and go to another website and do the same thing for a fee of 0.75c.

    Since when is cash not legal tender to pay for a service. This is soleley to avoid having people employed to collect toll fees. It should be mandatory that at least one toll booth be erected for cash paying citizens.

    What about overseas visitors who do not read english and hire a car. Apparently the fines being levied by these companies are out of control.

    I have yet to receive my Credit Card statement to see what fees or fines I have been charged in addition to the set up costs which is a wonderful way to raise extra revenue for absolutely nothing.

  144. Shane, I have no relationship at all with Qantas other than being a frequent flyer and a shareholder.

    AWAs and various other employment instruments existed. Did Jetstar use them?

    You’re making the anti Qantas and anti Jetstar comments, so tell me whether Jetstar have union agreements or not.

    Tell me how many apprentices all the foreign owned competitors employ? How much aircraft maintenance does Virgin and Tiger get done here?

    I think people are far too lazy in the criticism they direct towards Qantas. My interest is that of a traveller and a shareholder. I take this level of interest in any company that I use and invest in.

  145. I think people are far too lazy in the criticism they direct towards Qantas. My interest is that of a traveller and a shareholder.

    Lazy?

    As a frequent traveller, I have travelled with many airlines, and without doubt the service levels on qantas are the worst I have ever encountered anywhere.

    For whatever reason Tom, you seem to feel that Qantas is being unfairly criticised but the reality is the standard of (what they call) “service” is absolute crap.

    For this reason I won’t fly with them because my experience with other airlines is far superior.

  146. the provision of those services are at the expense of the community when owned by the State. It’s is a matter for Government to work out whether that State money (in the capital value) is best used to provide services already provided by the private sector (and possibly introducing price distortions into the market because of the State involvement) or whether that money would be better used to free up capital and tax revenue for other services which are not being provided by the private sector.

    But Dave, we end up still paying the expense, which is amplified by CEO’s salaries and investor payouts. These expenses are not incurred when a service is publicly owned.

    And I would really like to know what all this money that is ‘saved’ has been redirected to? Govt surpluses?? We are them supposed to be grateful for a meagre tax cut, when this does not cover the extra expenses incurred by privatisation.

    Like I said why should we even pay tax if the Govt are fobbing off their responsibilities to private companies and sending us the bill?

    ’m not saying it should be sold, but rather that selling it should be an option in certain circumstances and I’ve set out what those circumstances are. There is clearly a role for Government in providing services, not not where doing so causes greater harm.

    No you haven’t unless the circumstances you refer to are ‘when private enterprise can do it better’. In many cases we have seen that this is not the case.

    In what circumstances does Govt providing services ’cause greater harm?

    The point is when an asset/service is publicly owned then all Australians are owners. When is is privatised or part privatised a wealthy few become the owners and reap the benefits by slugging the former owners with extra cost.

    Govt ran these services adequately for years, sure there were problems, but these problems have not been rectified by privatisation, in fact some have gotten worse.

    If the Govt can’t provide the services they are obviously inadequate and should be given the boot. Otherwise we are paying them a hell of a lot to be ‘middle men’.

  147. Tom

    I only travel QANTAS and Jetstar out of loyalty to Australia so I help contribute to your dividends. That does not mean that I do not have the right to criticise the privatisation or operations or service of our national airline or the actions of its CEO.

    AWAs were used by Jetstar to offer a much lower rate of pay with substantially less conditions than QANTAS employees. You need to remember Impulse was a small airline trying to enter a tough duopoly and would have employed staff on the lowest possible cost basis at the time. AWAs stripped away Leave Loading, Overtime, RDOs and many more benefits. I know as I was offered ( read as coerced) to sign onto one

    The employment conditions for Jetstar were exactly the same as those offered to Impulses previous employees and the employment conditions were retained in their entirety as QANTAS could see a cheap employment condition contract when it took over Impulse. That is why the company was kept as a shelf company by QANTAS until it could launch its own cheap offshoot. this way it did not need to negotiate with any unions as the employment conditions were in existence under the name of Impulse and the name was simply changed to Jetstar.

    There was no other reason for QANTAS to take over Impulse as it was on its knees after a funder pulled out. QANTAS certainly did not need the aircraft.The Impulse workers at the time were allowed to fall by the wayside however the employment conditions were maintained.

    I am not debating the foreign owned competitors as to who they do or do not employ as they are not Australian. Same as QANTAS flys into other countries, they too fly here. And as stated I do not fly them, although after some of my experiences maybe I should, however I maintain my loyalty to all things aussie.

    As a shareholder were you one of the ones that voted against the outrageous golden handshake to Mr Dixon ? Imagine how much better things would be if relativity was returned to management and boardroom salaries. Ask Paul Simon what he thinks of CEOs these days. He was, afterall the extremely successful previous CEO who brought Woolworths form the brink of extinction to where it is today.

  148. FFS Tracie, your own comment says exacty what I’ve been saying and completely overlooks my repeated comments that privatisation has its flaws. You simply aren’t reading (or understanding) what I have written.

    Because this seems like groundhog day, I’ll make this my last post because I’m getting sick or responding to ill informed comments that respond to what they think I am saying rather than what I actually say.

    You say that in many cases the private sector can’t provide a better service. In saying this, you acknowledge that there are instances where the private sector does do a bettr job. Where this is the case, as I have REPEATEDLY SAID, the Government should get the f*#k out BUT and this is a big BUT, only if there is effective competition in the market and the private sector truely does provide a good cost effective service. Government will still have a regulatory role as well and this will be critical.

    And what happens where Government does provide a better service but the private sector still provides a decent service that can stand on its own? What I have said above is that privatisation is an option in these circumstances if the sale of the government provider will free up resources that can be put to better uses (such as providing essential services not provided by the private sector).

    You are more than welcome to suggest moving back to a communist regime where the Government provides all services and people all get paid the same omount etc but history will show that such an approach has it’s flaws. I’m a realist Tracie – Utopia sounds great but I don’t think it exists.

  149. Dave 55

    I am a realist too and have my own business so I certainly do not want to change to a communist state. I think private enterprise should operate all things that are non essential. And operate alongside government enterprises with things that are essential if they believe they can provide exactly the same service to the whole community at a lower cost.

  150. Shane

    Agree up to a point – if Government can imediately step in (at minimal cost) and take over private sector utilities if they fail to meet performance standards, then I think it is probably OK, but this requirees a high level of scrutiny and regulation (that isn’t without its own costs which need to be factored in) and a level playing field for all private sector operators which I don’t believe current;y exists in the electricity sector. It’s a complicated issue that IMO doesn’t have any simple answers.

    (my comment above wasn’t directed at you BTW – I don’t think that you have been suggesting a Communist structure))

  151. Dave 55

    I knew the comment wasn’t directed at me mate, I just wanted to let you know I am not for communism.

    Very hard for Govt to step in and take over private enterprise sector utilities once they have been privatised as they would immediately be branded communist and socialists.

    I think one of the biggest things is for Govt to stand up and not allow the continual consolidation in all industries that is resulting in duopolies in so many areas. This totally negates the supposed benefits to consumers of private enterprise, namely competition. Too many of the previous governments have allowed big businesses to swallow up smaller ones for absolutely no net gain to the country or the consumer.

  152. And what happens where Government does provide a better service but the private sector still provides a decent service that can stand on its own? What I have said above is that privatisation is an option in these circumstances if the sale of the government provider will free up resources that can be put to better uses (such as providing essential services not provided by the private sector

    Can you site an example of this ie. the private sector ‘standing up on it’s own’?

    You keep saying that privatisation is good if it can stand alone, but I fail to see where it has done this?

    As for money being freed up for other essential services, when and where has this happened? It seems to me that any ‘savings’ have failed to materialise anywhere else except maybe corporate and upper class welfare, and surpluses.

    BTW sorry to sea that you also can’t help but accuse me of being a ‘communiist’. I guess you must be getting pretty close to the bottom of your ideological barrel when you resort to that along with strawmen and misrepresentation. If your not with us your against us huh? Also sorry you can’t see beyond two ideologies to something better. Some ‘realist’.

    I could well accuse you of being a wealthy elitist for defending such blatant wealth transfer from public to private coffers.

    Rule by the elite, for the elite.

    Still waiting for you to tell me In what circumstances does Govt providing services ’cause greater harm as you claimed it may.

    Could it be just an example of your extreme bias and ideological blinkers? Why feign impartiality when it’s clear you are anything but?

  153. OK, but this requirees a high level of scrutiny and regulation (that isn’t without its own costs which need to be factored in) and a level playing field for all private sector operators which I don’t believe current;y exists in the electricity sector. It’s a complicated issue that IMO doesn’t have any simple answers.

    Do you agree the same level of scrutiny should exist for private enterprise?

    Also the term ‘level playing field’ is ambiguous. Does that mean Govts should assist private enterprise to be viable in an industry that is clearly not suited for private enterprise because of the need for high profit returns?

    If they can’t be viable without protectionism, then why are they involved in the first place, except for some notion that business should be involved in all aspects of our lives.

    And why is protection for private enterprise OK, but not for anything else?

  154. OK – I’ll bite (never say never I guess)

  155. <Very hard for Govt to step in and take over private enterprise sector utilities once they have been privatised as they would immediately be branded communist and socialists.

    Well someone should teach the Govt;

    “Sticks and stones may break my bones,
    but names will never hurt me?”

    If the Govt were half as good as they keep telling us they are they should be able to point out the difference. And if they really wanted to they would – when did being called names ever stop them doing exactly what they wanted?

    Politicians are investors too. Probably on a much larger scale than most private citizens.

    After the ABC Learning fiasco I don’t think it would be too hard to convince people.

  156. Some people will always deny climate change
    98. TracieofFNQ | December 3, 2008 at 10:46 pm

    Please tell me who denies climate change??? The climate has always changed. Greenland was not called “Greenland” for no reason.

    Well nooo. It was a bit of PR to encourage people to emigrate to ‘Green’land, which was never green. The joke is that Iceland is green and Greenland has always been very inhospitable.

  157. Tracie (deep breath)

    Can you site an example of this ie. the private sector ’standing up on it’s own’?

    yes – banks and airlines for starters.

    You keep saying that privatisation is good if it can stand alone, but I fail to see where it has done this?

    See above

    As for money being freed up for other essential services, when and where has this happened? It seems to me that any ’savings’ have failed to materialise anywhere else except maybe corporate and upper class welfare, and surpluses.

    While I don’t agree with the way it was done, the reality is the sale of Cth assetts largely paid off the nett Government debt freeing up money previously spent on interest to be applied to other services. The NSW electricty sale was to provide money for hospitals and another baseload coal station to make up the shortfall expected by 2014. I could go on but I wont because this answers your questions. As I said I was working froma theoretical perspective rather than actual exaples but there are real examples of it occuring (which I’m pretty sure could have been done better).

    Still waiting for you to tell me In what circumstances does Govt providing services ’cause greater harm as you claimed it may.

    Um – I pretty sure I have repeatedly pointed out that there is a significant underinvestment in renewable energy which is becoming increasingly more essential. A very big reason for this is Government ownership of electricty infrastructure and retailers. That fits the bill.

    Could it be just an example of your extreme bias and ideological blinkers? Why feign impartiality when it’s clear you are anything but?

    I have been defending privatisation as an option (option get it, not a compulsory tool) in any Government’s tool kit. I fail to see what is ideological about that. I am simply pointing out that it has its place when most other posters on this thread have flat out ruled it out, I simply tried to say that it has its place. I am very willing to critiicise particular applications of it and have done so (hell I don’t even like private schools!)

    And sorry about the communist comment by seriously, that is pretty much what you are advocating in some of your comments above.

  158. Tracie @ 155

    Absolutely! Agree 100% with that comment.

  159. The way I see it, if you’ve got a government-owned company that is profitable there needs to be a very good reason for the government to sell it. A profitable government-owned company will put more money in the budget coffers in the long-run than a one-off sale. With more profitable government-owned companies, there would be less reliance on taxes to fund services.

  160. 152. TracieofFNQ

    Can you site an example of this ie. the private sector ’standing up on it’s own’?

    Tracie, as a private training provider Registered Training Organisation I stood up pretty well against TAFE, as do many of my former clients, who we assisted in gaining RTO status…and all RTO’s…government or private have to undergo regular audits to comply with the Australian Quality Training Framework (AQTF)…and we did very well over sixteen years (some of our work was for TAFE)…and we never needed any government assistance or grants…all our own work… 🙂

  161. Dave (157). Again if banks are so healthy why has the Govt had to guarantee savings with taxpayers money? Not only this, the have had Govt assistance in the form of deregulation policy (which they screamed for), and corporate friendly IR laws. Not only this but the Govt have turned a blind eye to predatory lending practices which now have many Australians over their heads in debt.

    Same applies to Qantas.

    Catherine Cusack in the NSW Parliament:

    It saddens me that the Qantas I once knew is no more. Australians have loved Qantas and, as a result, it has had huge support from our governments, both in terms of regulatory decisions and publicly funded air travel, which I hazard could run into hundreds of millions of dollars worth of income to Qantas each year. Some examples of support for Qantas, based on our community’s faith in its philosophy, include the decision to allow the merger with Australian Airlines, which led to reduced competition and placed pressure on Ansett. With the collapse of Ansett, Qantas received almost monopolistic market share and access to infrastructure, a windfall that was almost unremarked because it happened in the shadow of September 11. It is worth noting that in the wake of September 11 most other international airlines were pushed to the brink of collapse, whereas at the same time the Ansett windfall to Qantas saw its domestic market share jump to 90 per cent.

    Qantas has also been a huge beneficiary of Australian economic growth under the Howard Government and the focus of tourism development and new infrastructure initiatives by all Australian governments. For example, the Sydney Olympics was another windfall for Qantas, even though Ansett shouldered the burden of being the official sponsor. Over the years the Federal Government has supported Qantas representations to block out and substantially delay the entry of competitors such as Malaysian Airlines, Singapore Airlines, Air New Zealand and Thai Airways. Most recently, the Federal Minister for Transport and Regional Services, John Anderson, was accused of being the “Minister for Qantas” after he blocked the entry of Emirates into the lucrative Sydney market. Minister Anderson is supporting Qantas’s desire to allegedly merge with a New Zealand, even criticising the Australian Competition and Consumer Commission [ACCC] for rejecting the original proposal.

    So again, where are these private enterprises that exist without Govt assistance?

    And yet again you still haven’t shown where this windfall from sales has gone into other essential infrastructure as you claim. Paying off existing debt does not count. It’s all very well to claim the proceeds from the sale of NSW electricity would have gone into hospitals etc, but still is not an example of where this has ACTUALLY happened.

    You are correct to say that Govt is at fault for the lack of investment in renewable energy, but it is hardly because of ownership of electricity. That would have more to do with rampant denialism and pandering to the fossil fuel industry.

    Same reason the auto industry is in the poo. Rather than actually developing better cars that were not reliant on fuel, they choose to continue with a century old fuel system. Because of their incompetence once again the taxpayer is expected to come to the party and provide handouts to private enterprise.

    But yes, I guess you have answered my questions is obfuscation counts as an answer.

  162. Alistair, I don’t think it is that simple.

    As I understand it, NSW needs another base load power station. The government is entirely unlikely to be able to fund it.

    The private sector is unlikely to build and operate one, particularly if it has to compete with government owned generators. Government owned enterprises react to a range of pressures – political reasons. They don’t simply react to a market.

    The private sector are reluctant to invest in this environment, so where NSW gets it’s next base load generation capacity from is a complete mystery.

  163. I have been defending privatisation as an option (option get it, not a compulsory tool) in any Government’s tool kit. I fail to see what is ideological about that. I am simply pointing out that it has its place when most other posters on this thread have flat out ruled it out, I simply tried to say that it has its place.

    Yes I know what you have been defending, but still think you are wrong. Privatisation may be good for lazy Govts who are more interested in their share portfolio than the commonwealth and security of the people.

    Like I said there are plenty of areas where private enterprise can make money without encroaching upon Govt services. I know the AUSFTA actually encourages more privatisation of services so I guess this is where the problem and ideology come from.

    If private enterprise can exist without regulatory favours, or handouts from taxpayers then good luck to them. When they are funded by taxpayers and ‘assisted’ by Govt with a view to undermining the public system then they have no place, and any Govt that supports this is betraying their own people.

    It is like selling your house (which you own freehold) and paying someone else rent. You may get a cash injection but in the long term end up paying for someone else’s asset.

  164. 162. Tom of Melbourne | December 4, 2008 at 4:37 pm

    Alistair, I don’t think it is that simple.

    As I understand it, NSW needs another base load power station. The government is entirely unlikely to be able to fund it.

    No I think it’s been comprehensively shown that NSW does not need another base load power station. That is predicated on the normal energy waste that is currently practiced, estimated to the output of a single base load power generator.

    Of course enforced efficiency is never going to be contemplated because of the loss of revenue. Economic growth only happens on the back of increased consumerism and waste generation that is paid for by consumers.

  165. Ansett closed for a range of reasons. Too many variations of aircraft type, complicating it’s inventory and the cost of holding it. So many different types complicated pilot and cabin crew training, the various maintenance training, certifications from regulators… Sir Rod as MD… The failed merger with Air NZ. Perhaps even over zealous safety regulation which closed it a couple of times at peak holiday periods.

    Ansett was in decline before Qantas acquired Australian Airlines.

    Virgin was the major beneficiary of the Ansett collapse, not Qantas. Sir Richard then owned Virgin and it grew several fold as a consequence.

    I’d be very happy for any other airline to succeed, if it showed the same commitment to supporting an Australian workforce.

  166. Tom, I was not saying the privatisation issue is simple. There are times when there are good reasons to privatize government-owned companies. However, I think governments these days have had a tendency to try and make a quick buck in the short-term without considering the long-term financial consequences of their actions.

  167. And sorry about the communist comment by seriously, that is pretty much what you are advocating in some of your comments above.

    No I’m not. I have no problem with private enterprise as long as it is actually private enterprise and not reliant on special favours and/or handouts from Govt taxpayers to ‘compete’. If it can’t compete, then by the rules of the free market it has no place in the industry – whatever it is.

    The trouble about labelling people is that it all comes down to the triumph of ideology, when it should be a case of what best serves the needs of the common people, not just an elite few.

    Which was the problem with communism, it served an elite few, and not the wider interests of the people. Isn’t if funny that the polar opposite, extreme capitalism, has the same outcome as evidenced by the situation in the US.

    I am more than happy for private enterprise to make their money in consumer goods etc, but steadfastly believe that essential services and infrastructure shold be off limits. As soon as CEO’s and investors need to be satisfied there will always be less money to pay decent wages to workers and maintain the service.

  168. Well that’s one example TB and good for them too.

    I have no problem with self sustaining private enterprise.

  169. The private sector are reluctant to invest in this environment, so where NSW gets it’s next base load generation capacity from is a complete mystery

    So they can borrow the money. Why is it ok for the US to owe trillions, but unthinkable that we should borrow money for essential infrastructure?

    Surpluses result from Govt’s being tight fisted, to the detriment of the country, as we have seen in the aftermath of Howard.

  170. Even better Adrian. We should all do what we can to cut down our personal energy use.

    We have been very energy conscious for quite some time now, and it is amazing how much of a saving you can make just by making sure fans/air conditioners are not left running in empty rooms, lights are turned off in areas not in use, and electrical appliances are turned of at the wall rather than left in standby mode. If you live in a sunny spot, solar hot water can save you a considerable amount as well.

    So it is in our best interests to start making our own savings where we can, we all know we are unlikely to get any sort of responsible leadership on this.

    Another way to encourage change is to sign up for ‘green’ energy. If enough of us vote with our $$$, companies will soon have the only motive most of them understand to act responsibly.

  171. Ansett closed for a range of reasons.

    Yep. Here’s one of them.

    What a suprise Tom, your good friend Geoff Dixon stifling competition in the name of the free market I suppose?

    Seems Govt assistance is only desirable when Qantas is on the receiving end. But then as you have declared your interest as a Qantas shareholder, I know you will agree with him.

  172. I’d be very happy for any other airline to succeed, if it showed the same commitment to supporting an Australian workforce.

    ROFLMAO. Refer my last comment and attached link. Does commitment to supporting an Australian workforce include threatening to outsource jobs every time Qantas has a dummy spit?

  173. I’d hate to be at a dinner party with Tracie – no-one else would get much of a word in.

  174. 168. TracieofFNQ

    Quite happy to play capitalist, although I call myself a socialist…I just happen to live in a free market economy…and I’m not keen on communism or dictatorships…I like democracy…

    …socialist are usually very good at free market capitalism, ’cause we know that if yoy simply service people’s real needs (not your own perceived needs and wants) then they will quite willingingly pay you for you service or products…really quite easy when you know how…

  175. So Tracie, if unions make a deal with a competitor to provide cheap labour, you don’t think the company that becomes uncompetitive should just accept this??

  176. Polly it’s hardly my fault if no one else is commenting on the same topic at the time is it?

    Got anything relevant to add?

  177. TB, just what are you implying?

    What in the world has democracy got to do with capitalism anyway? Do you think you can’t have democracy without capitalism?

    I think it would be fair to say that at times (like communism) capitalism actually stifles democracy.

    Like the democratic right of organic farmers to grow crops without fear of cross contamination by GM crops. Is it democratic that,a href=”http://www.plentymag.com/features/2008/09/how_to_contain_gm_crops.php”> a farmer can be sued by a GM company when through no fault of their own, cross contamination occurs?

    Once an organic farmer has been contaminated, he must either move from the organic to the conventional market, or shoulder the full financial burden of restoring his contaminated crop. In either case, he runs the risk of being sued by Monsanto or another GM company, on grounds of patent infringement. According to non-profit advocacy group Rural Vermont, Monsanto has filed at least 90 lawsuits against farmers, in more than 20 states.

    I reject this notion that if you are against corporate involvement in everything, that you are a communist.

    Like I said there are plenty of other ways for eager capitalists to make more than enough money to keep them happy, without forcing their way into industries they would not tourch anyway without numerous Govt inducements.

    Why is it some people can only see capitalism OR communism as economic models? I thought humans were supposed to be smarter than that. Though it is amazing how obtuse some can be when personal gain is involved.

  178. Oops, link didn’t work.

    Is it democratic that,a href=”http://www.plentymag.com/features/2008/09/how_to_contain_gm_crops.php”> a farmer can be sued by a GM company when through no fault of their own, cross contamination occurs?

  179. Bugger. Oh well if you want to read the link just cut and paste it.

  180. Tom (175) are you referring to Geoff Dixon whinging about union and Govt initiatives to save Ansett?

    I’m not sure what you are talking about.

    Geoff Dixon threatened to outsource Australian jobs if the Govt allowed perspective investors in Ansett any special deals.

    As an aside, I guess this also disproves your rhetoric about unions bankrupting business through unfair demands. In this instance it is clear the unions AND WORKERS were prepared to do their bit to save the airline.

    It seems that Qantas has some funny ideas about competition and a level playing field.

  181. Many don’t bother commenting on threads that one person starts dominating by posting multiple post in a row, one straight after another because they get lost in the flurry of words.

    You also start to skip over the posts because it gets very boring reading the same person pushing their own ideaological trolley post after post. Unfortunately anything useful the poster might have to say gets lost in the fog of their own words.

    I’ve long ago written off this thread as not being worth the bother of reading.

  182. “I’ve long ago written off this thread as not being worth the bother of reading.”

    Yep, Polly…it has been going that way for a few weeks now and hopefully it will improve.

  183. re 182

    To those that have indicated their displeasure at the quality of the commentary during recent days/weeks –

    On behalf of all contributors I would like to provide a sincere apology. I realise that those providing the criticism are among the forefront of Australia’s intellectual elite, but in the most practical and earthy, fair dinkum sense.

    Truly, we are privileged to participate in this blog with you, please do not give up on us. We need your leadership and we the poor bloggers will endeavour to meet your lofty standards henceforth.

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