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Cost of living crisis revisited

By Tristan Ewins - posted Wednesday, 27 August 2008


The aim of this opinion piece is to build upon previous work (See “A revolution in the transport economyOn Line Opinion article).

There are many aspects to Australia’s “cost-of-living” crisis. And it is a crisis felt most acutely by Australia’s poor and vulnerable. From housing, to welfare, to the transport economy, it is a crisis that is experienced in many varied forms.

And it is a crisis that extends also to the rising cost of utilities such as water, and the failure of wages - especially in the case of those on minimum and low incomes - to keep pace with inflation.

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My previous article considered the transport economy, and how it impacts on this crisis. This article will begin by considering the impact of private infrastructure and essential services on Australian citizens and consumers: especially in the instance of “PPPs”. (Public Private Partnerships)

Private infrastructure, utilities and essential services

Private infrastructure and essential services comprise yet another burden for which consumers are paying the price.

Mobile phone tower networks comprise one of the worst examples of duplicated private infrastructure. In this instance, under the aegis of competition, there resulted an explosion in the infrastructure cost to the broader industry.

Meanwhile, the fibre-optic broadband network embraced by Federal Labor is being proposed in the form of a part-private monopoly. Without the benefits of competition or of a natural monopoly what is to protect consumers from abuse of such overwhelming market power?

“Public Private Partnerships” (PPPs) have been supported by Labor governments in fields as diverse as roads and water.

Some of us - despairing of the situation - may very well ask: will the tendency ever end?

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The PPP model also fails for a number of other reasons:

First, even the most secure business interest cannot obtain credit as efficiently as government: especially in the case of Federal government borrowings. In Victoria, for example, the cost of the City Link road tolls were twice as high as they would have been if the tollway had been financed by public borrowings. Public Private Partnerships are also often adopted by government under the guise of “privatising risk”, “capturing” the skills of the private sector, or avoiding public debt.

The debt argument is a furphy. Displacing debt “off the books” - so that it is met by the public in their capacity as consumers - can cost several times more in the long run than had such projects been financed with public debt in the first place.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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