Tim Blair cites my recent observation that privatisation in Australia is political poison and goes on to ask for further advice on the issue
Take the next step, Quiggler; tell us which industries or businesses should be nationalised. People will like it, apparently.
I’m happy to oblige. The best case for (re)nationalisation is undoubtedly Telstra, minus peripheral bits like BigPond which should be wholly privatised. I’ve been making this argument for years.
Although Tim correctly points out the logical symmetry – if people hate privatisation, and clearly they do, then they should welcome nationalisation – he seems to be in some doubt about the politics. There are overseas examples to help here. Helen Clark’s government renationalised both accident compensation and Air New Zealand and didn’t seem to suffer any political damage, but of course, that’s New Zealand. More interestingly, the government led by Tim’s UK namesake renationalised Railtrack, to widespread applause, a couple of years ago.
What these examples have in common is that the privatisation was badly bungled, so that renationalisation was easy to sell. Although it isn’t, like Railtrack and Air NZ, on the verge of bankruptcy, Telstra is also a prime example of a bungled privatisation.
As Tim notes, given the deep public opposition to privatisation, exhibited recently over Snowy Hydro, there’s no reason to suppose that renationalisation would be unpopular. The problem is that the elite (not the people who drink cafe lattes, but those in both parties, banks and big business who actually run the show) benefit from privatisation and have no desire to stop it.
Update Tim liked this suggestion, and now he wants more. Next cab off the rank, in my view, should be airports. The privatisation of these monopolies was followed by massive increases in navigation charges, as well as a whole string of petty imposts on travellers. Another large part of the attraction, in Brisbane at least, was the ability to (mis)use the power of the Commonwealth to evade state and local controls on land development. And the involvement of politically well-connected types like Max Moore-Wilton only made the whole thing worse in every respect.
John Quiggin 
miloan803 wrote:
Let’s think about this logically. Airport shareholders are interested in what? Making money, right? And how do they do that? Well, thay attract lots of customers. And how do they get lots of customers? Well, they provide a service/product that people want. Unhappy customers go elsewhere, leaving shareholders with less what? Less business and less money.
I suggest you go back and read what has been written by others in this thread :
Mike H wrote :
And also read what was written by Professor Quiggin, himself, in the original article :
And, also, be sure to follow the link in Professor Quiggin’s article.
The Australian community has lost very badly by privatisation because the corporations which take over the control of these assets are not accountable to the community as a whole.
They can appear to be more ‘profitible’ and ‘efficient’ by gouging the captive customer base for every possible dollar, whilst shiftng the costs of degraded and eliminated services and job losses away from themselves and onto the wider community.
The fact that our political representatives have been able to get away with imposing their predictably harmful policies of privatisation, outsourcing, public private partnerships, etc for so long is a damning indictment of our supposedly democratic from of Govenement.
James,
“The privatisation of these monopolies was followed by massive increases in navigation charges”
without privatization, would there have been no increases in navigation charges. Do costs not go up every year, no matter WHO owns the airport?
There are few entities LESS acountable to the community as a whole than government owned and run entities. Have you ever tried to get anyone on the phone at any government entity to solve a problem? Is there anyone LESS interested in helping you than a government employee?
If you are suggesting that voters vote the way they do because of service at airports, I think you’re quite wrong. I’m not against nationalization if it makes sense, but I am not for it as a blanket policy. I’ll take my chances with a company, in this case an airport, that actually needs and wants my business, rather than one that couldn’t care less if I travel anywhere at all.
James, sorry I neglected this quote you gave, think it was Mike who said it.
“therefore air transport services to very small markets exit the industry and are not replaced”
I would hope so. Does it make sense to have air transport services to very small markets? Do you want you tax dollars to provide such services in small markets simply so that people, who I would assume are choosing to live in a very small market, won’t be inconvenienced by having to travel to a larger market to access air travel services?
milano803,
The massive increases in navigation charges are clearly much larger than what would have been the case if the airports had remained in Government hands. They were done so that as much wealth as possible could be transferred out of the pockets of the airline operators and the travelling public into the pockets of the likes of the Macquarie Bank and their exorbitanly remunerated CEO’s. I can’t understand why you simply won’t acknowlege the evidence before you.
The fact that may Government bodies are often so indifferent to the needs of the public they are meant to serve is indicative of the fact they are usually made to run according to a private enterprise business model, rather than as public services. This is not what the public wants and if we could ever get democracy properly working again in this country we should be able to change this.
James, how do you that “The massive increases in navigation charges are clearly much larger than what would have been the case if the airports had remained in Government hands.”
Can you show that airports in government hands did not have massive increases?
“The fact that may Government bodies are often so indifferent to the needs of the public they are meant to serve is indicative of the fact they are usually made to run according to a private enterprise business model, rather than as public services.”
Government bodies are indifferent to the needs of the public because they are run according to a private business model, which would depend upon satisfied customers?
sorry, I hit post before I was ready.
Government bodies are indifferent to the needs of the public because they are run according to a private business model, which would depend upon satisfied customers?
Isn’t it rather that government bodies are indifferent to the needs of the public because they are NOT run on a model that requires satisfied customers for success, which would be the private enterprise model?
milano803,
If we were to follow your argument to its logical conclusion there would be very little rural economic activity at all. We have already gone a long way into the vicious cycle caused by cutbacks to government services (e.g. rail), which, in turn, has caused job losses, and made local enterprise less viable, this has led to further service cutback driven by the economic ‘rationalists’ in Canberra and in the state capitals and by the private banks. This, in turn, has made even more rural businesses unviable.
As shown by Mike H, above the privatisation of the airports has further fed into the vicious cycle. The rural air services are not able to pay the exorbitant charges, which are necessary to satiate the enormous appetites of the Macquarie bank and its CEOs, so rural communities miss out on services.
I am not arguing that urban residents should give unlimited subsidies to rural communities (although the Australian economy is now so dysfunctional and distorted it is not clear who is subsidising whom), but the unnecessary costs, that have been imposed on the whole community, rural and urban alike, through privatisation, should not have been brought into the picture in the first place. If it had not been done we would have been far more able to accommodate the needs of rural communities.
Although I am sympathetic to renationalization in many cases, it does seem to me that the arguement about airport prices is not the best ones. Airtravel is massively underpriced because the environmental effects are not costed. The best thing to do would be to put a tax on passenger miles (sounds so much better than passenger kilometres) and use this to fund remediation programs and alternative infrastructure. However, no Australian government was going to have the guts to do that in the next decade or two.
Consequently, letting Maquarie Airports rack the costs up astronomically at least goes half-way – it provides a disincentive to fly, even if the money just goes to buying fourth houses for the senior management at Macquarie.
StephenL,
Of course we need to question the desirabality of air travel on the massive scale that occurs today, given that the petroleum, upon which it depends will be priced beyond the reach of ordinary people within a matter of a few years, and will be completely exhausted by around 2035.
However, I don’t see how handing across the control of our airports to the likes of the Macquarie bank will significantly help. Whilst they are making huge profits at our expense, they obviously won’t raise charges so high as to cause many people to no longer fly.
If there is any money to be made from discouraging air travel (and I would strongly doubt that that was the Government’s motivation for privatising the airports), it should go into the hands of our Governments so that it can be put to use for the benefit of the community, rather than for the purchase of extra houses for senior Macquarie Bank executives.
Can anyone guarantee that a privately-owned telco will invest sufficiently in rural areas (even if it is unprofitable) without government subsidies or high levels of government regulation? Surely this is reason enough for continued public ownership, at least of basic infrastructure?
That must explain why we get paid so badly for all the brilliant content we provide.
Vox, privately owned telcos won’t invest in unprofitable rural services. But that doesn’t mean that we need to have a government owned telco. We just need to put out to tender the provision of what our political system decides are ‘sufficient’ services and award the contract to the telco which asks for the lowest subsidy.
Providing rural services is a very poor argument for telco nationalisation.
James, rural business is unviable because there aren’t enough people living in rural areas to make it viable. It makes no sense to construct and run airports where there isn’t enough business. I’ll ask again, do you want to pay for airports in areas where the planes fly out empty because there aren’t enough passengers?
“As shown by Mike H, above the privatisation of the airports has further fed into the vicious cycle.”
He hasn’t really shown that.
“rural communities miss out on services.”
rural communities miss out on all kinds of services, not just airports. That’s a function of living in a rural area.
“the unnecessary costs, that have been imposed on the whole community, rural and urban alike, through privatisation, should not have been brought into the picture in the first place.”
what unnecessary costs?
I’d like to nominate CSL, formerly the Commonwealth Serum Laboratories. Since privatisation virtually all antivenine work has ceased in this the world capital of poisonous beasties, as the number of doses required would not justify the expenditure. It also seems silly on basic precautionary risk management principles not to have a government-owned drug and vaccine manufacturer beholden to the Australian people rather than foreign shareholders in this age of pandemic global diseases.
Hal9000,
Excellent idea! In fact I would take the idea much, much further.
The decision by the previous Federal Labor Government, with the full support of the Liberal and National Party opposition, to privatise the CSL would count as one of their most stupid and short-sighted decisions.
It is plainly idiotic that the profit motive and arcane patent laws are allowed to interfere in the provision of life saving drugs and serums.
As you have shown, in the case of the CSL, the private sector business requirements has caused the cessation of vital anti-venine work.
An even more striking example is the efforts by drug companies to charge high prices for anti-HIV drugs, effectively placing them beyond the means of millions of people in the third world.
The drug companies argument essentially amounts to saying that if they hadn’t withheld the drugs from those people, effectively causing, perhaps, millions of needless deaths, they would not have got an adequate return on their investment.
This is precisely why medical research should be done by Government funded bodies on behalf of all of us and not by corporations who, with few exceptions, put their own bottom lines ahead of the public interest.
Once the knowledge of how to cure life-threatening illness has been obtained, then the profit motive would not be an impediment to making the drug as widely available as possible to all who need it.
I would advocate that every Government in the world set up their own drug companies and hire anyone now working for private companies who, for adequate remuneration, would be prepared to work for the common good of humankind rather than for profit alone. I think they would have very little difficulty in attracting sufficient staff.
Whatever knowledge was obtained would be freely shared amongst these bodies and, indeed, to anyone who wants to put this knowledge to good use.
If the existing drug companies aren’t able to compete, then that would be too bad. They could be bought out by our governments.
milano803, you ask, “what unnecessary costs”?
How many more times do I have to spell it out? The bloated salaries of The Macquarie bank executives and of many of the Macquarie Bank’s employees and the returns to the Macquarie Bank’s investors.
None of these people have skills which are necessary for the proper functioning of our airports. They could work perfectly well without them.
On top of that the costs, ultimately to be met by the traveling public, include all the necessary red tape entailed in privatising the airports in the first place and the additional red tape entailed in regulating the privatised airports, even though the extent of regulation is obviously inadequate.
Tom Davis,
“Vox, privately owned telcos won’t invest in unprofitable rural services. But that doesn’t mean that we need to have a government owned telco. We just need to put out to tender the provision of what our political system decides are ’sufficient’ services and award the contract to the telco which asks for the lowest subsidy.
Providing rural services is a very poor argument for telco nationalisation.”
I am not convinced it is as easy as that.
1. There are good theoretical arguments (auction theory) and good empirical examples of the relevancy of auction theory to counter your suggestion that selling a project to the lowest bidder is the best solution.
2. The project in question is a tax payer funded subsidy. ‘Privatising’ subsidies would mean that the agent (the government) who has the power to raise revenue (taxes) to pay for the subsidies cannot be held accountable because the money is passed on to an enterprise who is accountable to its shareholders. This would mean that the government acts as an agent for at most a sub-set of its constituency, which might be empty (foreign ownership). The response to this confusion is to have regulatory bodies. This response to the confusion is the source of ‘red-tape’ about which ‘everybody’ complains.
3. The justification for privatising tends to be the argument that private enterprise is more efficient. I have yet to find one empirical study which identifies the source of the alleged efficiency.
4. The papers by JQ, referenced on this site, deal specifically with telecommunication.
5. I have not studied the telecommunication industry in detail but I’d like to provide another example of ‘natural monopoly’ (a major argument in JQ’s submission) from the Water and Sewerage industry in NSW. To ensure water supply, the government would have to duplicate the services provided by private providers (recognised in the IPART paper). To the extent that telecommunication is an essential service in rural Australia (ostensibly telecommunication and mobile phones become more important with the distance between people) the same argument applies.
6. Current account and BoP. While ‘privatisation’ is often associated with ‘private investment’ and ‘private investment’ in turn is associated with ‘private savings’, this mental model does not fit reality very well. ‘Private investment’ is at least partially financed by borrowing from all over the world. A government guaranteed subsidy potentially increases the borrowing capacity (reduction in the variance of revenue). This has implication for the composition of the Balance of Payments [BoP] (exchange rates and hence export and imports and interest payments).
7. Skills. It is known that multinational corporations carry out R&D primarily in the home country or in ‘large markets’. To the best of my knowledge, Telstra used to provide a training ground for Australian telecommunication engineers and technicians. I’d be surprised if all Australian telecommunication engineers want to work as glorified sales staff.
8. The term ‘externality’ tends to be used to refer to ‘negative externalities’ (eg pollution). But this is only a habit. Any activity which has positive side-benefits (extends the consumption possibility set of at least one member of society without reducing that of anybody else) provides ‘positive externalities’. Providing a training ground for R&D and on the job training in skills is an example.
In general, the physical realities of a country and the distribution of its population and the preferences of the population cannot be ignored. It may well be that the arrangements in the EC and in the USA suit the physical circumstances and the preferences of people in these regions. It does not mean that therefore ‘they’ are more ‘efficient’.
Ernestine Gross
“Telstra used to provide a training ground for Australian telecommunication engineers and technicians.”
Actually that is not quite true Telstra have not trained any one (beyond 3 to 5 day courses in the specific installation of individual devices.)
The last intake of Apprentice technicians in Queensland (a whole 20 – 30 of them) was some where in the late 1980s. I can not remember the exact year but it was before 1990 but after 1985.
The year that I started there were 270 trainees (as we were called then) and that was about the average anual intake for a number of years. Over time the numbers declined as newer technologies reduced the staffing need. (As an example, in my second year field training I was attached to a suburban Telephone Exchange with a staff of approximately 20, working shifts from 7:00 am to 11:00 pm. This staffing level was necessary to keep the mechanical swhitching system functioning. Today I doubt if there would be that many on the staff that looks after ALL the Telephone Exchanges between Noosa and Coolangatta)
As you can see the youngest that any seriously trained Telecommunications Technician could be (assuming 19 years old at start of training) is 36 but the majority of us are 50 plus.
The recently appointed CEO of Telstra cited skills shortages as being one of the major problems confronting the company. This is only to be expected after some 15 years of staff shedding and some 20 years of nil training.
“How many more times do I have to spell it out? The bloated salaries of The Macquarie bank executives and of many of the Macquarie Bank’s employees and the returns to the Macquarie Bank’s investors.”
You seem a tad obsessed with Macquarie Bank, which isn’t the subject here.
“On top of that the costs, ultimately to be met by the traveling public, include all the necessary red tape entailed in privatising the airports in the first place and the additional red tape entailed in regulating the privatised airports, even though the extent of regulation is obviously inadequate.”
can you list a few of these costs and red tapes associated with running a privatized airport that doesn’t also occur with a nationalized one?
milano803 Says:
Well, yeah, and you seem to be some guy from the US who has no ability nor right to judge what is or is not relevant to the discussion.
Please go away.
milano803,
Of course the Macquarie Bank is the subject here! They are now the owners of Sydney Airport and they are now gouging every possible dollar from the traveling public so they can pay their CEO’s their obscene salaries and maximise the return on the investment of Macquarie Bank shareholders.
You asked “what unnecessary costs?” and I have told you.
It was stupid for this Government to have sold the Sydney Airport. If they had retained ownership it would only be necessary for the Sydney Airport to charge the travelling public enough to meet its operating costs.
The additional red tape is the necessary regulation of Sydney Airport (and I am assuming that their is some regulation of the Sydney Airport by the Government). This is an additional cost that always must be met by the taxpayer when an entity is privatised. If the entity was government owned then one layer of red tape need not exist. The entity would simply be directly accountable to our Parliament.
Ernestine Gross and Lindsay, this article in the Herald Sun, entitled “Telstra hangs up on training: Labor”, may be of interest. It shows that Telstra has not employed a single subsidised apprentice since 2000. Another example of how a privatised utility can appear to be more profitable and efficient by shifting costs, previously incurred by it when it was run as a public service, onto the broader community.
“can you list a few of these costs and red tapes associated with running a privatized airport that doesn’t also occur with a nationalized one?”
Vastly increased landing fees, parking fees, entirely new fees like the additional $2 (plus waiting time at the new boom gate) to catch a cab from the airport rank, parking invigillators who behave like they get a commission on tickets issued etc.
The Brisbane airport cost over $800 million to build at 1988 prices and sold in the mid-90s for less than half that at mid-90s prices. And now the travelling public, the one that paid for it in the first place, has to pay extra to keep the new owner’s profits up there in the stratosphere with the aircraft. There has been no service improvement, just higher charges for the same service.
Meanwhile the new owners are able to make use of the former Commonwealth Government exemption from town planning regulations to put in a new shopping mall in competition with the town-plan compliant one up the road. Fill yer boots!
“Vastly increased landing fees, parking fees, entirely new fees like the additional $2 (plus waiting time at the new boom gate) to catch a cab from the airport rank, parking invigillators who behave like they get a commission on tickets issued etc.”
all of these things have increased at all airports over the years. No matter who owns them. What I was asking about is what fees have increased as a result of privatization that HAVE NOT also increased at airports in general.
milano803,
I would be most surprised if any Government airport in the world is fleecing its customers to the same extent that the customers of the Brisbane and Sydney airports are being fleeced.
If that is the case, then, at least, in a democracy, where the managers of Government owned airports are ultimately accountable to the public, it is possible to change that.
On the other hand if control of these once publicly owned and operated facilities, built at public expense, is handed across to unelected corporations, only accountable to their own shareholders, it would be very much harder to change.
It is the common experience of myself and everyone else on this forum that costs have risen astronomically since privatisation. What else has changed since then that would require the charges for all these services to have been raised so excessively?
If you are so adamant that Government owned airports are gouging the travelling public to the same extent that privatised airports are then, perhaps, you would care to substantiate your claims. If you can’t provide examples, then please at least explain why you think that you believe that they would given that they have no need to make such excessive profits and pay such bloated salaries as are paid to the CEOs of the privatised airports?
Otherwise, please stop wasting everybody’s time.
HAL9000, thank you for your very helpful post. Could you please tell me which government we have to thank for having sold the Brisbane Airport at less than half of what it cost to build? Was it the Howard Government, or the previous Federal Labor Government of Paul Keating? Or was it done by a Labor or National Party Queensland State Government?
Isn’t it wonderful to have been so well served by our elected political representatives?
“I would be most surprised if any Government airport in the world is fleecing its customers to the same extent that the customers of the Brisbane and Sydney airports are being fleeced.”
But what I said was “all of these things (landing fees, parking fees, etc)have increased at all airports over the years. No matter who owns them.” And they have. Landing and parking fees go up every year at airports all over the world.
“If that is the case, then, at least, in a democracy, where the managers of Government owned airports are ultimately accountable to the public, it is possible to change that.”
Airport managers of government owned airports are elected positions?
Proponents of Telstra privatisation I have three words: Horizontal Fiscal Equalisation
Since Federation, Australian Governments have adhered to the principle of Horizontal Fiscal Equalisation whereby government finances are distributed in such a way that no matter where any Australian lives they have, more or less, equal access to services.
Brisbane Airport was sold in 1997 by the Howard Government. I must concede an error in my earlier post, which was according to my faulty understanding. The purchase price was in fact $1.4 billion, which was pretty much what its construction cost was worth in 1997 dollars. Oops – mea culpa. The rest of the post about new and higher fees and lower convenience for the travelling public stands, however.
Hal9000,
Thanks for answering my question. I must admit that the sale completely escaped my attention at the time, but I wasn’t following politics then as closesly as I have been in more recent years.
Of course it was preferable that the Government at least got back what it paid to build the Brisbane Airport, but we both agree that it is largely beside the point, anyway.
In fact, in Sydney, it was thought, at the time, that the Macquarie bank had paid far too much for Sydney Airport, so, for a while, in a sense, the Australian Taxpayer appeared to have done well from the deal.
However, in the longer term, in both the cases of the Sydney and Brisbane airports the public will have lost far more than the short term windfalls ganied by the Government from the sales due to the anti-social effects of the private owner’s price gouging as described by Mike H and others.
Lindsay,
Thank you for your description of the history of Telstra apprentice technicians in Queensland. Apologies for the delay in acknowledgement.
I fully agree with you that technological changes can affect the number of technicians required. A time series of numbers of apprenticeships per se is therefore not sufficient to draw big conclusions. But, it seems Telstra has cut apprenticeships for technicians much more than called for by technological changes and the current CEO is not happy about the consequences. For the purpose at hand, I’ll call this ‘excessive reductions in apprenticeships’
The period you identify with the onset of the excessive reduction in apprenticeships corresponds with the onset of ‘micro-economic reform’. This is interesting because it matches observations I’ve made in other infrastructure industries (transport, water and sewerage, health).
You mention 3-5 day training courses for installation of specific devices. This is interesting too. Isn’t there a difference in the outcome of these courses between people who take a short training course after having had an apprenticeship and years of experience and those who get short training courses only?
Ernestine
“You mention 3-5 day training courses for installation of specific devices. This is interesting too. Isn’t there a difference in the outcome of these courses between people who take a short training course after having had an apprenticeship and years of experience and those who get short training courses only?”
The current method of training is categorised as “competency based training”. This form of training basically teaches the procedure without any of the underlying principles and theories that underpin the principle.
Certainly as a refresher to a serious training regime, such as an apprenticeship, to update ones skills on new technologies and/or devices. However there has been virtually no training in the telecommunications field since the mid 80s.
In some respect it is worth a little review of the history of the “trade” . Under the Post Master General’s department, and subsequently, Telecom Australia the trade existed only within those two organisations. With only a few exceptions no-one other than an employee of the organisation, and then only carrying out authorised work could legally even take the screws of the cover of a socket.
There was no “trade” as such other than that recognised by the organisation. This does not mean poor training however, quite the contrary, I did a 5 year traineeship to be qualified as a Telecommunications Technician. This traineeship consisted of a 60/40 mix (60% theory 40% practical). Only a couple of years after I qualified, a new classification of Technical Tradesman wasintroduced that replaced the Technician. This training was an apprenticeship and lasted 4 years insted of 5 and was a 40/60 mix rather than 60/40.
With de-regulation (1987?) it was realised that there were no “qualifications” that could be used to define who would be authorised to work in the industry outside of Telecom so a licensing regime was introduced. This regime was overseen by the newly created Australian Telecommunications Authority (AUSTEL) and consisted of an examination to gain an AUSTEL license. This examination was heavily weighted in favour of Electricians as it was realised that they were most likely to be able to perform the tasks, it was so weighted, in fact, that it was extremely difficult for a technician to gain a licence. Over one third of the original AUSTEL examination related to MEN earthing systems. A term I had never heard of and had no idea what it even meant. It is extremely important in electrical installations but totally irrelevant to telephony.
I’m going to have to stop here, I am only about half way through where I thought I would be going with this post and unsure of any size restrictions. If you are interested I will continue.
Lindsay, thanks. Please continue.
Lindsay, thank you very much for the history. It is interesting. Please do continue.
James and Ernestine,
Thank you for your encouragement,
These original AUSTEL Examinations had no training courses or textbooks, they were specifically designed to license a large number of people quickly. It could be said that the training followed the Exam.
Now about here is where a small digression should be made to examine the effects of de-regulation. The major change revolved around defining the demarkation point where the responsibility of the carrier (Telcom /Telstra) ended. This demarkation point, described at its simplest, is basically the place where the underground cable is terminated on a customer’s property and is defined in the act as the Network Termination Point (NTP). The provision of service to that point is the responsibility of the carrier, and may be provided however and by whoever the carrier deems appropriate. On the carrier side of the NTP is the Telephone Exhhanges and distribution cabling including the pillars, cabinets and RIMS that you may notice on the footpaths from time to time. Beyond the NTP is the domain of the licensed cabler and includes any cabling within the building, telephone points, Telephone systems and any device that may be connected to a telephone line. It is this side of the NTP that requires a licensed person to perform the task using materials and devices that have been explicitly approved by the regulating authority. In the very early days of deregulation there really was few other than Telecom Technicians who could do the job, but all of a sudden these persons were unable to legally perform these tasks because they were not licensed. This is where the first of the “modern training courses” came about. Courses specifically designed to teach sufficient to pass the Austel Examination. In addition to licensed persons, the materials also needed to be approved. Some of the equipment had already been approved by Telecom and these were “grandfathered” accross but much of the equipment was not approved and there are some devices even now that are not approved for use on customer’s premises. These devices are predominantly related to underground cabling and is basically simply an ecconomic situation. As an example some manufacturer suceeds in securing a contract with Telstra to supply underground joints. Because the joints are being used by Telstra on the network side of the NTP there is no need for the devices to be approved by the regulator. A situation arises where I as a private contractor am called to repair some damaged underground cabling between two buildings on the same property. It may be such that it would be advantageous for me to use one of these devices but they are not approved. The supplier would probably sell 100,000 of theses devuces to Telstra for every 1 that might be used by a private contractor. As far as I am aware the cost for a device to be approved as approximately $24,000.00. Half of that cost is for laboratory testing to ensure that it does not cause any radio or electrical interference; that it will not do anything that could cause damage to the telephone network; and that it is not a safety hazard to the user. The other half of that cost is the fee due to the regulator for the approval.
Notice however that the testing does not include any test as to how well the device works, or even if it does. That falls under the category of “caveat emptor”.
I’m sorry but it is getting late and this is getting long again.
More tomorrow night if interested.
Lindsay
Still interested, Lindsay.
Thanks again, Lindsay. Please continue further.
BTW, the article, entitled “Telstra employee tells of cutbacks and penny pinching” from the abovementioned web site of “Citizens Against Selling Telstra” just may be of interest to you, although it is a little dated by now.
This concept was doing the rounds at Optus before I left in 1997. The result in my view was terrible. People with no underlying understanding of technology were trying to make decisions based on paint by numbers task guides. It was mostly unworkable and in practice they leaned heavily on anybody in their vacinity that happened to have an underlying understanding of principles. This caused those of us with an understanding of underlying principles to pack our bags and leave. It caused some terrible outcomes for customers.
In essence I don’t think the mentality was limited to Telstra but is probably one of those management fashions that does the rounds. I also don’t think it has much to do with privatisation, economic rationalism or microeconomic reform. Although if somebody can identify any linkage I am happy to listen to theories.
Terje
“In essence I don’t think the mentality was limited to Telstra but is probably one of those management fashions that does the rounds. I also don’t think it has much to do with privatisation, economic rationalism or microeconomic reform. Although if somebody can identify any linkage I am happy to listen to theories.”
Competency Based Training is the standard method of trade training and is the method used in all TAFE courses as far as I know.
I was taught this method of assessment ant training when I had to get my cert III in trainingand assessment to become a registered assessor with TITAB (Telecommunications Industry Training Advisory Board). My instructor at that time was a pastrycook instructor. The training and assessment methods are supposed to be common
more history later
Terje says: “In essence I don’t think the mentality [competency based training] was limited to Telstra but is probably one of those management fashions that does the rounds. I also don’t think it has much to do with privatisation, economic rationalism or microeconomic reform. Although if somebody can identify any linkage I am happy to listen to theories.”
I don’t have a theory to offer, but I can offer the following on policy:
‘Competency based training’ is an integral part of ‘Australian Vocasional Education and Training (VET) policy.
Links to ‘economic rationalism’ (bottom line criteria), ‘microeconomic reform’ (competition, productivity, flexibility) can be detected by reading through the various components of VET as outlined on:
http://www.ncver.edu.au/statistics/aag/aus2000/natpol.htm
Specifically: “The aim of competency-based training is to ensure that vocational education and training programmes better meet the needs of industry and Australia’s enterprises.” Source: above web-site.
The astute reader of the web-site may notice that some time during the development period of VET, the term ‘enterprise’ was substituted for ‘industry’. This of course creates a problem when one public enterprise constitutes ‘the industry’ for many years (eg telephony) but then is to be split up to create a ‘competitive market’ (for what?) and the sub-units of the former industry demand different ‘competencies’ and don’t want to pay a cent above the narrow set of skills they need – or management thinks they need (now).
As you said, Terje, the result is, in your view, “terrible”. And, “It caused some terrible outcomes for customers.”
And, who are the customers? The students who take competency based training? Many would think this is the case. Private providers charge and business is used to calling those who pay, ‘customers’. And the people who pay for the services of the former customers? Yes.
So, if competency based training is a ‘management fashion’, then ‘privatisation’, ‘microeconomic reform’, and ‘economic rationalism’ are related fashions.
Terje, maybe you should have a serious talk to the ACC and other industry bodies who had significant imput in VET.
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Linsay, I look forward to your later post.
Ernestine,
I can accept that privatisation, microeconomic reform etc may be fashions (for better or for worse) however I fail to see the linkage between these fashions and the compentency based training schemes that seemed to be so badly managed when I encountered them (although you seem to find it vivid). When I say that the outcome was bad for customers I mean that Optus served some customers badly because employees were making decisions without understanding how things work. For instance they would cause significant delay to service installations by allocating equipment to a new service even though it should have been clear (to anybody that understood the systems) that the allocated equipment was not fit for the purpose (ie different version, incompatible protocol set etc). There were multiple such examples that caused daily grief. The solution (in my view) was to have people who understood the implications of their decisions and the inter-relationship between network components. The managment solution at that time was to try and design better process rules which might have worked except that those allocated to create such rules became progressively less competent over time as first principle understanding was lost from within the team due to a lack of first principles training (ie a downhill snowball).
I should add that during this time I did a short 2 day course on “competency based training” at UTS and I found the principles presented did contain a lot of merit. In particular the distinction drawn between reliable assessment of skill and the valid assessment of skills. Unfortunately this proved to be another case in which on the ground deployment seemed to be out of touch with basic principles. All sorts of reliable measures were put in place to manage staff development with little thought to the validity of such measures.
As I see it both public and private institutions can be badly run and can become captive to foolish managment fashions. I don’t see how private ownership is supposed to suffer from this any more than public ownership although I do accept that privatisation like any transitional process is prone to being very disruptive to an organisation.
Regards,
Terje.
The privatisation of public transport in Victoria has been an utter disaster.
The standard of service has failed to improve yet the public subsidy is now much greater than in was under state ownership.
I probably should have done this in the beginning and saved a lot of time.
I am attaching a short history of the training procedures that I developed as an introduction to a triaining course
“Since the late 1980s, the Telecommunications Industry in Australia has been subject to a number of significant changes. From the monopoly of the Postmaster General’s Department and Telecom Australia to the fragmented industry of today where there are a large number of suppliers of equipment and services
The first step towards the introduction of competition in the telecommunications industry came about through the Telecommunications Act 1989. This Act allowed for the supply, installation, maintenance, and operation of all equipment beyond the network boundary of a carrier to be open to competition. The Act also provided for Austel to licence people working in the cabling industry.
In July 1997 the Act was revised and Australian Communication Authority (ACA) was established via the merger between the former Austel and the Spectrum Management Agency. The ACA was responsible for regulating telecommunications (including cabling) and radiocommunications in Australia.
Between July 1997 and 3 October 2000, the ACA continued to licence cablers for customer premises cabling work and these licences remained current until their expiry date. During 1999 and 2000 the ACA developed an alternative model to licencing called Cabling Provider Rules (CPRs) to replace the individual cabler licencing system. CPRs are based on an industry – run registration scheme. According to the ACA, CPRs were developed to simplify and reduce the regulatory burden for cabling providers, remover barriers to entry, streamline cabler training arrangements and promote industry self-regulation. CPRs commenced on 3 October 2000 with existing licences remaining valid until expiry.
Under these new rules those working in the security, fire and data industries (previously exempt under the licencing system) were required to register”
During the period 1990 to 1997 I was involved in a small way in the formation of the TITIB (Telecommunications Industry Training Advisory Board). The TITAB developed a training package and procedures to incorporate a Telecommunications stream within the Electrical Apprenticeship Scheme. Although not perfect (my feeling is because of the strong influence of the electrical trades in the formation of the package) it did provide the possibility of some serious training based upon an apprenticeship. The intention was for a number of specific modules be incorporated into the 2nd, 3rd and 4th years for those who wished to be involved in the industry and receive some recognisable qualifications. Part of this package included “Workplace Assessors� to assess the practical aspects of the requirements as well as to provide for Recognition of Prior Learning (RPL). I am one of those assessors.
This training package commenced with the first of the 2nd year apprentices in 1994 with them expecting to qualify in December 1997.
As you can see from the dates the new Telecommunications Act came out some 5 months before these apprentices qualified. I can still clearly remember the stunned unbelief of those at the Brisbane meeting when the ACA representative outlined the proposed new training requirements.
The TITAB has still continued to develop and improve on that original concept which is presented as a Certificate II or Certificate III. Because there is no “trade� as such, these courses carry little weight in the industry for they are not a requirement. The simplest method is to employ a kid as a general “gofer� for 6 months and then send him to a 4 – 5 day course to cover the legislative aspects. Providing he can obtain a mark of “competent� he is then entitled to apply for registration as a cabler.
Terje,
“The solution (in my view) was to have people who understood the implications of their decisions and the inter-relationship between network components.”
The big problem is that there are so few of us left and we are getting old and tired
Terje,
Your last post seems, to me, to be an exercise in hair-splitting to avoid confronting what should be obvious to all: that the corporatisation and subsequent privatisation of government owned utilities have caused a massive loss of skills in the Australian workforce as a consequence of the managers of these businesses having shifted the costs of training onto the wider community.
Any government, with our best interests at heart, would acknowledge that these policies have been abysmal failures for the public interest. It would abandon its plans to fully privatise Telstra and would act, without delay, to change Telstra and other utilities so that they are run as public services once again.
James,
Actually I think the original nationalisation of Telecommunications was the problem. We had a thriving competetive market in telephony for a short period at the begining of the 1900s before the federal government stepped in and criminalised private sector involvement. This history and the pioneering effort of the private sector is too widely ignored (perhaps because the earlier telegraph was mostly government sponsored and operated).
The problem with privatisation in Telecommunications was the unwillingness of the political players involved to consider any form of split within Telstra. The ALP (who introduced competition in the way of Optus) in fact sought consolidation with OTC merging with Telstra and Aussat being forced into bed with Optus. Logically there was no reason why OTC had to be bundled with Telstra, no reason Aussat had to be bundled with Optus (except that it was not making money) and little reason why Telstra business units like mobile could not have been split from the main business.
In terms of deskilling being an artifact of privatisation it would be interesting to explore this theory in terms of the experience in other nations and in other areas of privatisation. For instance was the privatisation of the Commonwealth bank or Qantas accompanied by such a phenomena. Or did the railway operators of Japan (now arguably the best in the world) dumb down when they were privatised in the 1980s.
In other words, show me the pattern.
Regards,
Terje.
Terje, the ‘pattern’ is obvious and glaring. It is the massive skills shortage in this country, which is widely acknowledged to have been caused by the government’s penny-pinching in regards to TAFE and our Universities and corporatisation and privatisation.
The economic ‘rationalist’ ideologues that drove the spate of corporatisations in recent decades ‘forgot’ that the wider community benefitted from the training provided by these utilities run as public services. Many private employers were able to employ skilled workers who had obtained their training at the expense of the wider community through taxes or charges for the services provided by the utilities.
It should have been obvious to our policy makers that to continue with this policy was in the public interest, but wasn’t.
To tell us that that, somehow, these problems would have been avoided if only they had properly structurally separated Telstra and Optus is stretching credibility.
The obvious reason why training has been virtually eliminated is that the cost of training was largely borne by the utility, whilst the benefit was gained by the whole community. When the community owned the utility and the the utility’s charter included serving the wider community, that was no great problem.
Corporatisation simply means that these entities were only concerned with their own ‘profitability’. Even if decisions made by these corporations inflicted economic and social harm on the broader community, that was not longer a concern to them. Hence, the decision by the corporatised Telstra to close its training schools, in the late 1980’s (I think – do you remember the date, Lindsay?).
Privatisation only made an already bad situation even worse as Lindsay has pointed out, earlier.
As for Japanese Railways, I can’t comment except to say, firstly, that it is only one possible exception, secondly that, about a year or so ago, there was an accident with a large number of fatalities, which I heard was caused by cut-backs, and, thirdly, that the example of Enron shows show that organisations with serious defects can easliy create a facade which give the appearance of been well run.
The privatisation of rail in the UK has been an unmitigated disaster, as has Kennet’s privatisation of public trasport in Victoria as Steve Munn has pointed out in this thread and as Ilan has pointed out in an earlier thread.
Any politician who continues to foist policies of privatisation on the public, after this sorry record, belongs behind bars, rather than in Government.
I doubt that the utility was necessarily thinking with such nobility. More likely its monopoly status meant that any technical training had little utility elsewhere so that the people it trained were in effect bonded.
In any case examples such as the following lead me to suspect that the issue was only ever transitional.
http://www.optus.com.au/portal/site/aboutoptus/menuitem.813c6f701cee5a14f0419f108c8ac7a0/?vgnextoid=fbedabadc0a54010VgnVCM10000029a67c0aRCRD&vgnextchannel=3d6aabadc0a54010VgnVCM10000029a67c0aRCRD&vgnextfmt=default
As for the UK rail privatisation the reasons for failure relate to regulation and structure. They limitations in cross ownership between rail service operators, track owners and rolling stock were so constructed in such a way that innovation or quality improvements were probably never achievable. Had they done things the Japanese way they would have no doubt been very successful.
Regards,
Terje.
Terje Says:
Think about this for a moment, Terje. Why were the cross ownership limits put in place? To encourage competition and prevent the creation of a private monopoly.
The trouble is, in some industries competition has already been proven (early last century) not to work. Competition renders some capital intensive industries unprofitable. Either the whole industry fails, or it all falls into the hands of a single player. This is what led to the creation of either regulated private monopolies (in the US) or public monopolies (here).
For the last fifteen years or so, though, competition has been regarded by some as an end in itself, the belief being that good outcomes would follow automatically. This belief is demonstrably false.
Your belief that eliminating regulation would provide the good outcomes we’re currently not seeing is also false. It just leads to a different kind of bad outcome.
P.S.
Terje, I just read through the natural monopoly entry at Wikipedia. It’s reasonably balanced, take a look.
It is only NPOV in the first few paragraphs. Read on.
I might go in on the weekend and change it.