catallaxy files

catallaxy in technical exile

Why privatisation is both unpopular and politically secure

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We hardly needed a public opinion poll to know that even if some members of the public would buy shares in a privatised Medibank Private, most would not buy the argument for its privatisation (though actually who would buy shares in a business subject to price control and dependent on a subsidy Labor eventually will and should abolish?). For the record, a Newspoll funded by the Health Services Union found 64% against, 14% in favour, and 22% not sure.

The added stink about whether Medibank Private was morally the government’s to sell probably isn’t helping, but privatisation has fallen out of favour in Australia. I think this can be put down to two main factors:

1) As I argued in Telstra’s case, the pragmatic electorate needs reasons to be convinced of these issues, and if an enterprise is working ok in public hands why change? Even as someone ideologically predisposed toward privatisation, I can’t say that I find the government’s arguments compelling. They are planning to use Telstra proceeds (if they can sell it, that is) for a public servant retirement fund. It’s not exactly inspirational stuff.

2) Big business is on the nose. More people than in the past think it has too much power, and ‘business executives’ are given high marks for ethics and honesty by only 15% of the population, lower even than union leaders (though the same as federal MPs). Business are not trusted to run privatised businesses the way the punters want.

That said, this is not an issue the government need worry about. In the mid to late 1990s when the Australian Election Survey was asking about the most important issues for electors, less than 7% of voters rated privatisation as their first or second most important issue, and of course the Coalition has been repeatedly returned to office despite being the more pro-privatisation of the two major parties. Elections force voters to make aggregate assessments that render opinion on issues like this near irrelevant.

Privatisation is also, I think, for the reasons outlined in (1) an issue with strong status quo bias. Though the 1990s privatisations weren’t popular, re-nationalisation isn’t likely to be popular either once the costs are explained. What would be its benefit? And since Labor knows that it can achieve most goals it wants via regulation at a fraction of the cost of public ownership re-nationalisation isn’t likely to appear on the political agenda.

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Written by Admin

April 19, 2006 at 6:44 pm

Posted in Uncategorized

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