Last Friday, in an opinion piece in the Courier-Mail (see image above) that was consistent with its current “Go Queensland” campaign, I re-entered the debate on privatisation:
To anyone who has worked in both private and public sectors, the higher level of efficiency in the private sector is obvious. It is driven by the strong private sector desire to minimise costs and maximise profit. Hence, for a long time now, I have been in favour of privatising government-owned businesses, with the caveat that the privatisation is well-managed and monopoly businesses are (or remain) appropriately regulated. By well-managed, I mean that the government needs to ensure it gets a good sale price for the business, as privatising an income-generating business obviously affects the budget. Also, the government needs to consider the impacts of any job shedding on local economies, and appropriate labour market and training programs are introduced, if necessary.
My views on privatisation are informed by international literature reviews that were conducted in the wake of the large number of privatisations that began in the eighties, with Margaret Thatcher’s transformation of the British economy, and which then occurred all over the world. The evidence was undeniable that privatisation yielded efficiency gains, and therefore was ultimately good for the economy and living standards. The most comprehensive and authoritative review of the impacts of privatisation was published in 2001, in the American Economic Association’s Journal of Economic Literature, the world’s leading journal for reviewing and summarising the findings of economic studies. The review by US economists William Megginson and Jeffry Netter, titled From State to Market: A Survey of Empirical Studies of Privatization, found among other things:
“Research now supports the proposition that privately owned firms are more efficient and more profitable than otherwise comparable state-owned firms…
…We know that privatization “works,” in the sense that divested firms almost always become more efficient, more profitable, and financially healthier, and increase their capital investment spending.”
So economists have been confident about the benefits of privatisation for at least the last decade-and-a-half. It is time for Queensland to stop being a laggard on privatisation.