Interview: Public Defender
Legal: Craig's Story
Unions: Wrong Way, Go Back
Politics: Queue Jumping
History: Iron Heel
Economics: Waging War
International: Under Pressure
Poetry: Billy Negotiates An AWA
Review: A Pertinent Proposition
The Locker Room
Truth in Advertising
What a Woman!
It's Not Pretty
The Westie Wing
In today's mixed economy, where taxpayers underwrite the risks involved in PPPs, the public deserves to get a proper return on that investment.
It's always been hard to sell taxes or debt financing to fund infrastructure and services to the constituency, especially when your political opponents keep promising less taxes and focus on self-reliance as the basis for society.
We are well into an insatiable economic rationalist quest for higher profits and lower taxes, to a place where greed is good, where the individual is encouraged at the expense of the public good. We have the absurdity of record levels of private and household debt compared with record levels of balanced Government budgets.
In the context of small revenue bases and flat taxes, PPPs seem like an expedient way to go. But PPPs have been around a while.
Just under 200 years ago, Australia had its first Public Private Partnership, on the site of the current NSW Parliament.
When Governor Macquarie arrived in Sydney in 1810, he found that the town's hospital consisted of some tents and a few temporary buildings.
Head Office in Britain refused to provide funds to build a permanent hospital, so Governor Macquarie entered into a contract with some local businessmen. In return for building the hospital, the consortium would receive free labour, building supplies and a monopoly on rum imports.
But the agreed monopoly amount of 45,000 gallons was soon increased to 60,000 gallons.
Shortly after completion of the Rum Hospital, architects condemned the hospital for its shoddiness and many shortcomings. Despite Macquarie requesting the contractors to make amends, the quick patch up job failed to remedy the defects.
The "rum contract" was Australia's first PPP.
Later, along Parramatta Road, private contractors were allowed to open tollbooths for horse and cart. People complained but the tolls continued through to 1883.
And so the tradition of publicly funded private sector building programs through PPPs and tolls continues...
But recent experience is putting more than a few holes in the accepted thinking. People are talking about many different ways to finance and manage infrastructure - bonds, debt, taxes, user charges, levies, private finance - and maybe even a "real partnership" between private and public.
It's just that some approaches are more expedient than others...
The latest attack on decency and a fair-go - called "WorkChoices" and shepherded in by "Anti-terror" laws - complements the general push into less taxes and decreasing Government investment.
In an age where personal capital - shareholder assets, superannuation funds, and so forth - is encouraged, it should equally be okay to encourage Government ownership and capital investment. But things get turned upside down by the Conservatives - the number one cheerleaders in the decline of public and social capital.
Have a look at Telstra - there are foreign Governments lining up to buy the remainder of our national telecommunications system. In economic parlance, they're prepared to "Manage the risk."
But according to our Federal Government, it's just not on to have a national telecommunications system owned by Australian taxpayers.
We have the Federal reactionary conservative regime of Howard and Costello - and their State puppets, Debnam and someone or other - keeping on with the mythology of "Government is bad, the Private sector is good!"
But history shows us the Private sector isn't exactly the Manager and Purveyor of all things good. Just take a look at HIH, Enron, WorldCom, OneTel...
And we know the private sector and shareholders have unending appetites.
Those yearly dividends and profits are never enough. Reaction to each record profit announcement is to cut yet more jobs and wages. The call on Government is to cut taxes and regulation. And we have CEOs and shareholders maximising salaries and dividends, many times at the expense of workers' pay, workplace safety as well as the environment.
Meanwhile we have Howard and Costello continuing to entrench the cycle of tax bribes on the back of cuts to social spending and economic infrastructure. And we have a public that readily accepts these lines taken from the private sector and joining in the chorus.
It's acknowledged governments of all persuasions have not invested enough in infrastructure - things like water, schools, hospitals, rail - and we'll be seeing the effects of the rationalist approach for decades to come.
Infrastructure - social and economic - is what we rely on to contribute to society and help ourselves. Social infrastructure includes schools, hospitals, housing, police stations and parks. Economic infrastructure includes railways, roads, ports, utilities and telecommunications.
Most of the infrastructure in Australia has been provided by the public sector. But there are problems with committing to infrastructure - there are high initial capital costs, projects are time consuming to build and operate when compared to the political cycle, and these things aren't usually built as projects in themselves but rather to support other social and economic activities.
Compare those challenges with the gearing of the private sector. The private sector is profit driven and hasn't exactly been enamoured by things like long payback periods.
Certainty of income isn't what drives the private sector. Social stability isn't exactly top of the list for multinationals and venture capitalists. For them, it's best to keep the conga line of feather dusters and spin doctors "moving forward" into new opportunities and calling for the next tax cut, dividend cheque or retainer.
Do we have to wait until the whole thing collapses, New Orleans style, before we can successfully argue for things like infrastructure bonds or using public sector borrowing to ensure the job gets done?
Shouldn't it be okay to demand that contracts be real partnerships? If taxpayers effectively underwrite the risks, shouldn't they get a share in the returns?
The widespread acceptance that private is "profit" (good) and public is "loss" (bad) - must be challenged.
It's time for public shareholders - that is, taxpayers - to demand more.
Taxpayers ought to demand a real partnership in PPPs. Taxpayers ought to demand a bigger stake in infrastructure and services spending and be prepared to pay for them. Taxpayers surely would support adequate taxes for proper services and infrastructure. And they would support more control over, and returns on, those investments in theirs and their children's futures.
The private funding of infrastructure projects policy need a major rewrite. Competition policy is failing when NSW taxpayers become hostage to the private sector.
The NSW Public Accounts Committee inquiry into PPPs, called for by ALP Conference earlier this year, provides one opportunity to have a look at what can work in the future.
In the next few years some PPPs slated for go-ahead include arrangements for our drinking water. As recently reported, if we don't get it right, NSW taxpayers might face the bizarre situation of having full dams but be forced to buy privately produced water.
If NSW taxpayers can't be convinced that they need to directly invest in shoring up things like their drinking water, the most basic of human necessities, then perhaps we'd be better off just getting stuck into the rum.
If you require assistance accessing information from a NSW Government Department or a Minister, or have feedback and ideas for speeches, or if you believe you know an issue that should be looked at by one of the Parliamentary committees, contact me at Parliament House on (02) 9230 2052 or email [email protected]
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