Another fail grade for privatisation

Malcolm Turnbull is thinking of privatising the payments section of Medibank. He argues that the existing system is out of date and inefficient. It was probably out of date and inefficient when it was first introduced. Having people travel to a shopfront to place a claim for doctor’s expenses is hopelessly antiquated. The difficulties is  that there is no IT infrastructure that links doctors, Medibank and the banking system.  Nor for that matter, doctors and pharmacists.

So Turnbull is right in suggesting the system needs to be upgraded.

But his argument that this needs to be done through privatisation does not  necessarily follow. He’s obviously aware that the Federal Government is not going to have the funds for this extremely expensive upgrade so his solution is to hand a large and profitable section of Medibank to the private sector.

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 In economic matters, Turnbull is as doctrinaire as Abbott

However, privatisation really doesn’t have a particularly good track record in Australia. The woes of the transport and power systems in Victoria, privatised under Jeff Kennett, are symptomatic of the overall problem with privatisation.

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 Future generations will  continue to pay the price of Kennett’s disastrous policies

 When the government runs health, education, power generation, water storage, road networks or transport, it does so to provide services to the population. These utilities may return a dividend to the government but this is then used to benefit the population again, not to line the pockets of shareholders.

When a public utility is privatised, the new shareholders require a return on their investment. This is at the expense of the consumer, as Victorians have found, with their electricity costs.

Privatised public utilities will inevitably cost more than they would have done under the government. The argument about competition is nonsense. There is no competition for Citylink and many other privatised utilities operation near monopoly conditions, with all the economic disadvantages that monopolies have for the consumer.

And now we find that the chickens of the recent privatisations of the TAFE system are coming home to roost.

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The Age reports that Thousands of students of at least four colleges have been left in limbo with huge debts following the collapse of one of the country’s largest vocational education companies.

Global Intellectual Holdings wWhich owns the failed colleges) made $83 million in revenue in the year to June 2015, making it one of the largest vocational education companies in Australia.

Global Intellectual Holdings making a profit of $17.95 million in 2015. During the year it paid $14 million in dividends to its directors Roger Williams and Aloi Burgess. The accounts show the company held $19 million in debt.

That’s it in a nutshell.

Williams and Burgess took $14m out of this company in one year.  This means that this education system, funded by taxpayers money, cost $14 million a year more than it needed to. And even then, it didn’t work properly.

It’s obscene that two individuals can make $7 million each, in one year, out of the system that is completely subsidised by the government.

It’s time that the government reinvigorated the TAFE system and stopped putting money into pockets of people who have no interest in education and are only interested in profit.

But that’s privatisation for you.

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