The cancellation of Queensland Rail’s (QR’s) Riverfire party in 2008, following an intervention by the Transport Minister, supports the case for its privatisation, Dr Doug McTaggart, CEO of QIC, argued today (for a refresher on the incident, see QR boss defends $30k Riverfire party).  Dr McTaggart made the reasonable argument that, while this may seem a trivial incident on its face, it would have raised questions in the minds of QR’s clients regarding what other QR business decisions might possibly be subject to ministerial intervention.

The occasion at which Dr McTaggart spoke was the QR Privatisation Debate between Dr McTaggart and leading Australian economist, Prof. John Quiggin.  The Debate was held at Brisbane’s Customs House, and was organised by the University of Queensland’s Economics School.

Both sides made strong arguments, and many in the room were receptive to Prof. Quiggin’s criticisms of the privatisation.  Prof. Quiggin presented his usual arguments that the benefits of privatisation are over-sold.  For example, he argued it is bad economics for governments to sell income earning assets to pay for recurrent spending, such as on education and health.  (The Government, of course, would counter that it is using the proceeds of the sale to invest in important infrastructure, such as roads, schools and hospitals, which will generate returns to the community into the future.)

Prof. Quiggin was most passionate (and entertaining) when he criticised the Government for the reversal of its election commitment not to sell QR, and for the quality of the information produced to justify its decision, which in his view severely limited the prospects for an informed debate.

There was no knockdown argument from either side, but I’d give it to Dr McTaggart on points.  The Riverfire cancellation argument was an effective one, as the cancellation really was unnecessary.  Given the dog-eat-dog nature of the business world, surely its permissable for corporate types to be tossed a few bones every now and then.