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Is it a sin to sell a government asset?

By Everald Compton - posted Thursday, 4 April 2013


More emotion is generated by the debate on Government Asset Sales than most issues that are littered around the political playground. Most of the comments are generated by the thought that there are votes to be won by perpetuating this battle - far more so than the remote possibility that there may be deep political convictions involved.

This means it’s time to try to take the discussion out of the hands of political opportunists and elevate it to a rational plane, as the balanced development of the nation will depend heavily the creation of many more new assets.

A good start will be to look at some history.

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For most of the time since the arrival of the First Fleet, the establishment and management of public facilities and infrastructure were the unquestioned province of governments. In general terms, it is safe to say that it was only in the era after World War II that the sale of public assets arrived on the political agenda.

It is also valid to comment that the idea of selling assets only arises when governments run out of money. There has been little concern that most public assets were run inefficiently and could have provided better service at lesser cost if run privately.

The issue became firmly on the table when the Loans Affair destroyed the reputation of the Whitlam Government in 1975. The Mines Minister at the time was Rex Connor, a dyed-in-the-wool socialist and nationalist, who wanted the expansion of Australia’s mining capacity to be firmly in government hands. He tried to raise billions to make this possible by using the services of a doubtful financial trader named Kemlani. He almost succeeded, but finally crashed spectacularly.

Had he obtained that money, he intended to open half a dozen major mines, all of them owned and run by government. This generated a passionate furore about whether or not mines should be developed by private capital (which they eventually were), or whether the nation should own them, thereby finally benefiting taxpayers directly.

The controversy also generated a new debate on what to do with existing government assets. Were they untouchable Australian institutions or could they be a source of cash and a means of greater productivity if managed privately?

Eventually, the debate led to the sale of the Commonwealth Bank and Qantas during the Hawke/Keating era, but this caused little controversy at the time, and now most voters would not recall that they were once government assets.

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The passion revived when John Howard announced that he would sell Telstra in three tranches. He succeeded in getting the hotly-disputed Bills through the Senate only by offering Tasmanian Independent Senator Brian Harradine some enormous benefits for his State that no other State received.

He was helped also by Queensland ALP Senator Mal Coulston, who ratted on his party by accepting Howard’s offer of the position of Deputy President of the Senate in exchange for his vote. This eventually provided a sterling example for Peter Slipper to use in participating in a similar scenario with Julia Gillard some years later so as to become Speaker of the House of Representatives.

But, the controversy was compounded by the extravagant sale price of Telstra shares. It was a long way in excess of real value, causing many thousands of ‘mum and dad’ investors to lose an important part of their savings when the price subsequently dropped rapidly. This put them off participating in further sales of government assets, even to the extent of opposing the concept with very real fervour as they felt they had been robbed by the government.

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About the Author

Everald Compton is Chairman of ATEC Rail Group Ltd, Surat Basin Rail Pty Ltd, Steel Mississippi Pty Ltd and Tenement to Terminal Pty Ltd. Professionally, he is a Certified Practising Accountant and a Certified Practising Marketer. Subscribe to Everald's monthly newsletter by emailing compton@everaldatlarge.com and follow him on Twitter @EVERALDATLARGE.

He is the former Chairman of National Seniors Australia and has taken-up a new role as Chairman of the Federal Government’s Panel on Positive Ageing. He is also Chairman of the Everald Compton Charitable Trust, an Elder of the Uniting Church and an Honorary Senior Fellow of the University of the Sunshine Coast.

Everald became a Member of the Order of Australia in 1993 and was awarded the Centenary Medal in 2001 for his services to the transport industry.

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