MELBOURNE — A new anti-privatisation group, Public First, was launched here on March 6. About 30 different organisations, including trade unions, church groups, welfare groups and environmentalists, are involved in the campaign to prevent the sale of public utilities such as gas, water and electricity to private business interests.
JOHN ERNST, a lecturer in urban and social policy at the Victorian University of Technology, spent 1987 to 1991 in Britain researching the social impact of the Tory government's privatisation of public utilities for his book Whose Utility?, published by Open University Press. Â鶹´«Ã½ Weekly's KIM LINDEN spoke to Ernst, who is also involved in Public First, about the social cost of the Victorian government's push to privatise public assets.
What is the British experience of privatisation?
The results in Britain are particularly disastrous. My overall conclusion is simply — some people benefit and others lose. The winners are the already affluent. In some cases businesses have recorded 500% profit increases because of privatisation. Meanwhile, the losers are the taxpayers, the great bulk of ordinary people who pay for privatisation.
In the case of the British water service, it cost taxpayers œ9 billion to transfer from public ownership to private. The results include a substantial deterioration in the quality of the service, an increase in the cost of supply and a decrease in the security of supply.
Are there similarities between privatisation in Britain and what is happening now in Victoria?
Victoria is imitating the British model quite closely. The state government hasn't learned anything from the British experience. That's made clear when Victorian Treasurer Alan Stockdale is quoted as saying that the UK "just didn't do it right".
The British government has had to strengthen the regulatory system. In 1992, [Prime Minister John] Major introduced legislation to set up a system to regulate both the privatisation operations and the privatised utilities. The role of the regulators is to make sure that the interests of consumers are protected. The British government has found that it has had to extend the powers of the regulators.
The Victorian government's system of regulation is the "light touch". The powers of the regulators are pathetic, and the government has the power to override any of the regulators' decisions. The regulators are appointed by the government, the Office of the Regulator General. The regulator general is Robin Davey, the former head of Austel, the corporation set up to corporatise Telecom Australia. This is an indication that the regulators have no genuine interest in the ordinary consumer, equity impacts or how privatisation will affect low income earners.
The government has also set up a "community consultative committee" of eight hand-picked people who the government says can make "intellectual contributions". These people, who do not oppose privatisation, are supposed to advise the regulator general on consumer matters.
In the UK the regulatory bodies are more broadly representative; they are funded by the licence fees of the privatised companies, whereas in Victoria they are funded by people's taxes. The Victorian government is taking advice that favours the privatisers. Here the privatisers say that the problem with the UK is that there is too much regulation.
How is the privatisation of the State Electricity Commission of Victoria (SECV) proceeding?
Electricity production consists of three parts: generation, transmission and distribution. On the generation side, there are five generating companies, all of which the government wants to sell.
The government has set up distribution companies with slick names like United Energy, Solaris and Powercorp. Kennett has been all over the world trying to sell these companies. United Energy has already been sold and there are threats that more will be sold. The sale of the electricity generating companies was started by the state ALP government under Joan Kirner, with federal government sponsorship. The Kirner government sold 40% of Loy Yang B to Mission Energy, a US-owned company, which gave it operating control of the power station.
After Kennett was elected [in 1992] he sold another 11% of Loy Yang B; now the company controls the power station. An auditor general's report revealed that Mission Energy bought the entire 51% for the same amount that it was going to pay for the 40%.
What are the impacts of the privatisation of the SECV on the work force?
The SECV has one third of the work force it had 10 years ago, and the loss of workers will continue with privatisation because the easiest way to make quick savings is to get rid of workers.
The impact has included problems with security of supply. Victoria is well known for its "brownouts" — power failures — since corporatisation and privatisation began. There have been a number of concerns raised by retrenched and other SECV workers through bodies such as engineering societies, about the affects of privatisation. No senior SECV people will publicly declare what is happening. Most managers in the SECV have received quite big pay-outs.
What other impacts have there been?
Victorians have lost two fundamental rights as a result of privatisation: there is no longer any right to freedom of information, and there is no right to go to the ombudsman. Victorians cannot access basic information about disconnections, the environmental practice of the privatised utility and so on. This information is considered to be a "commercial secret".
But there are other potentially huge impacts. In Britain the privatisation of water has raised concerns because it is a public health issue. People may be cut off from water. This could lead to outbreaks of infectious diseases such as hepatitis A and dysentery. Even the conservative British Medical Association is concerned. The British medical journal, Lancet, has said that privatisation of water could lead to a return to the health standards of the 19th century.
How are Victorians organising against privatisation?
In the UK it took people seven years to realise that they had something to defend. Thatcher was eventually defeated, though, by people being organised and taking to the streets over the poll tax issue.
In Victoria there have been several public meetings in different suburban areas. Some of these have been organised by public housing tenants groups and some by the ALP. Some ALP members have also produced newsletters in opposition to privatisation. But these are just electoral tactics. The ALP cannot present a sound argument because it has been pursuing a policy of privatisation.
The public knows that the state ALP is involved with the federal ALP in carrying out privatisation. The state ALP is on shaky ground. Although it says it will reverse privatisation, it will not be able to because of the costs. The British Labour Party promised to reverse privatisation but found that the utilities were sold at such low prices that it would cost three times the sale amount to repurchase them. Renationalisation is not an option for capitalists.
In a recent Melbourne Age poll, 92% of people said they were against privatisation. So Kennett has announced a $2 million public relations campaign. How he will sell privatisation as something good is a mystery. There are no good examples of privatisation. What will he say: "Look at Chile, look at Britain"? The government could call it the "Don't Look" campaign!
In response to the anti-privatisation sentiment, trade unions and environment groups have set up the Public First Campaign. It includes [rank and file] membership from the recently formed Communications, Electricians and Plumbers Union. It also includes members of Friends of the Earth, the Uniting Church and the People's Committee of Melbourne.
How will Public First organise?
We will have road shows pitched at rural communities which are affected by privatisation, particularly of water. Traditionally the control of water has been seen as a local government function in rural areas.
The privatisation of electricity has also really affected rural areas. Two hundred jobs were lost in rural areas after Powercorp was privatised, and the closure of electricity depots has resulted in further job losses. In the urban areas it's a matter of getting common interests together.