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Why on earth wouldn't Labor support privatisation?

By Graham Young - posted Friday, 31 October 2014


Labor oppositions campaigning against the privatisation of assets by state and federal governments should think again. It's in their political and economic interests to allow them to proceed.

Oppositions want to get back into government as quickly as possible, but too much opportunism can cut off too many policy options when they do regain office.

Labor doesn't have a solid ideological objection to privatisation having sold Qantas, CBA, and Queensland Rail, to name but three.

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So it should welcome a situation where it can bank present political benefits from the sales and also pocket the long term economic dividends.

The fact is that the public opinion has never supported a privatisation so the opposition doesn't have to actively oppose one to gain a political benefit.

They can sit tight and watch the government's political capital erode on its own, or they can quibble about sale price, structure, process and how the proceeds are to be distributed, to help it along.

But once they actively oppose, then it makes it more difficult for them when they return to government.

One reason for the unprecedentedly huge defeat of Labor in Queensland at the 2012 election was community anger at their hypocrisy when they privatised assets after promising in the 2009 election that they wouldn't.

After that an LNP win was always guaranteed, it was just a question of what the margin would be.

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The public's fear of privatisation boils down to a few propositions: they think that the new owners will price gouge; that the state will lose access to valuable cashflows; and that unemployment will increase.

There is little evidence to support any of this.

After most privatisations we have seen prices fall, at least in relative terms.

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This article was first published in the Australian Financial Review.



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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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