May 20, 2013

Horse 1487 - Selling Off What's Left Of The Family Silver

Mr Abbott who will more than likely be the 28th Prime Minister of Australia after the September election, has frequently accused Ms Gillard of breaking promises. He should know what reneging on promises looks like, having previously served in four terms of Howard Governments from 1996-2007; Mr Howard (whom Tony mentioned four times in his budget reply) famously coined the  phrase "non-core promises" when he wanted to ignore any election commitments he may have had.
In Abbott's case though, I'm not necessarily worried about him breaking promises but rather, his keeping them.
We will abolish new health and environmental bureaucracies. We will deliver $1 billion in red tape savings every year. We will develop northern Australia. We will repeal the mining tax. We will create a one stop shop for environmental approvals. We will privatise Medibank Private. We will trim the public service and we will stop throwing good money after bad on the NBN.
- Tony Abbott, Address to Institute of Public Affairs, 5th April 2013

Privatising things and selling everything in the kitchen cabinets has been pretty standard government policy for governments of both colours for the past 25 years. It could be labelled as the simple economic question of an opportunity cost, however I tend to think that in practically every example, it's more an example of hyperbolic discounting and the results of the opportunity cost means that we've all been sold so very very short in the long run.

In 1991 Mr Keating looked in the silverware cabinet for stuff to sell and found the Commonwealth Bank so he sold that. In 1992 he moved sold the domestic Australian Airlines to Qantas, then in 1993 sold that off too.
Mr Howard who obviously didn't have any more imagination decided to raid the silverware cabinet
himself and sold off Telstra in three tranches, starting in 1997.
Potentially Mr Abbott will be Prime Minister come September and to be honest, I don't see him as being any more imaginative or forward looking than either Keating or Howard whom he lionises and swoons over (having mentioned him four times in the Budget Reply). Also, I suspect that Mr Abbott will want to curry the favour of the Murdoch press because he's seen and personally benefited from the razoring of both Mr Rudd and currently Ms Gillard. When Murdoch calls for something, Abbott would more than likely follow:
THE commonwealth bureaucracy should be slashed in the interests of prosperity and efficiency, according to an Institute of Public Affairs report, which slams as "unsatisfactory and piecemeal" Labor and Coalition plans for public service reform.
The report, called Razor Cuts, Not Paper Cuts, calls for privatisation of the ABC, SBS, Australia Post and Medibank Private, cutting more than 44,000 jobs from the public sector
- The Australian, 22 Oct 2012

Ah, the Institute of Public Affairs... a "think tank" whom Mr Abbott is already friendly with. In case you're interested, this is the link to said report:

Actually, let's not beat about the bush here, part of reason that Mr Abbott wants to slash and privatise more government services, is actually to change the demographics of the electorate itself; to create a slight more favourable environment which would result in his re-election:
Surveys of political attitudes consistently show that Australian public sector employees, including 
those engaged by the commonwealth government, mainly tend to vote for left-of-centre parties 
which are ideologically committed to extending the sphere of governmental activities at the expense 
of the private sector.
Government employees in effect represent a bloc who wield significant, and indeed unparalleled, 
influence within the Australian political system
- Razor cuts, not paper cuts, from pages 23 & 24

To that end:
For example, privatising the ABC, Australia Post, Medibank Private and SBS alone would transfer 44,200 employees to the private sector – an amount 15 times greater than the Gillard government’s proposed 3,100 APS staff reductions for this financial year.
- Razor cuts, not paper cuts, page 2

Just like in the federal election of 1990, Mr Keating mentioned nothing of selling Qantas and the Commonwealth Bank, although Mr Abbott hasn't explicitly said that he would privatise the ABC, SBS, Australia Post or even Medicare, the fact that he hasn't explicitly said that he wouldn't either, suggests that it's not been ruled of the table. Certainly the IPA and Murdoch would like him to.
My ministers won’t need to learn how to be a good government because they’ve been one before.
Sixteen members of the Coalition shadow cabinet were ministers in the last government that actually delivered surpluses, as opposed to just promising them.
Those surpluses weren’t just John Howard’s and Peter Costello’s.
They were my surpluses and Joe Hockey’s surpluses and Julie Bishop’s and Warren Truss’s and Malcolm Turnbull’s because we were all part of the last government that Australians knew was competent and trustworthy.
- Tony Abbott, Budget Reply Speech, 16th May 2013

Let's have a think about this. I've just totted up the reported profits which were forgone as a result of just the privatisation of Telstra since 1997. The scary thing is thanks to governments which Mr Abbott has been part of (he's been the MP for Warringah since 1994), threw $56.568bn down the toilet in forgone dividends - just for Telstra.
Forgive me for feeling slighted but the Commonwealth Bank reported a full-year profit for 2012 of $7.09 billion, the largest result by a non-mining company in Australia. That's $7.09 billion which did NOT go into consolidated revenue as far as I'm concerned every year that ex-government businesses post profits, is still the past robbing the present.
Since 1991 the net dividends which have quite literally thrown down the toilet and not been consolidated into government revenues from just three ex-government enterprises (Commonwealth Bank, Telstra and Qantas) and adjusted for 2013 dollar values amounts to just over a trillion dollars; yet Mr Abbott and Hockey have the gall to cry foul over an $18bn fiscal deficit and net government debt of $247bn, when this could have been eliminated four times over if previous governments (including one of which Mr Abbott was a part) hadn't sold all the trophies in the silverware cabinet.

As for this:
we were all part of the last government that Australians knew was competent and trustworthy.
Competent and trustworthy? Come again? This is the same government  who lied about the Children Overboard affair, who lied to the Australian people about going to war in Iraq and now is being touted as being "competent and trustworthy"?
None of the government's arguments were supported by the intelligence presented to it by its own agencies. None of these arguments were true.
Howard this week quoted the findings of the parliamentary inquiry, but his quotation is selective to the point of being misleading.
- Margaret Swieringa, former Australian Government Ministerial advisor, in the Sydney Morning Herald, 12th April 2013

A potential Abbott "competent and trustworthy" government has now said on record that:
Far from cutting to the bone, we reserve the right to implement all of Labor’s cuts, if needed, because it will take time to un-do all the damage this government has done
By keeping, if needed, all Labor’s budget cuts – and – by not implementing any of their budget spending measures unless specified, we will achieve the first duty of every government: namely, to preserve the nation’s finances.
- Tony Abbott, Budget Reply Speech, 16th May 2013

Personally I disagree with this most violently. I think we need to go all the way back to the Code of Hammurabi, circa 1772 BC.
"The first duty of government is to protect the powerless from the powerful.”

The most powerless people are those whose futures are decided by us in the present. Once you've sold off the treasure in the family silverware cabinet, you never ever get it back; nor do you get the rewards of dividends which should have rightly accrued either. That to me is criminally stupid; bordering on treasonous because contained within section 51 of the constitution says that the parliament and by inference the government shall make laws for the peace, order, and good government of the Commonwealth. Bad government has effects which last well beyond that term of parliament.

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