Renationalisation in Australia

I got a message from a student asking about examples of renationalisation in Australia. Here’s my response

There hasn’t been much explicit renationalisation of business enterprises in Australia. What we have seen is

(a) Public private partnerships (PPPs) being wound up and returned to the public sector. As well as Port Macquarie, some others are mentioned here
and here on private prisons
and social housing

(b) The government has also re-entered areas of business it had previously privatised. The most important example is the NBN, but there is also the big Tesla battery in SA and other interventions by the state government there. The Federal governments proposed Snowy 2.0 is another example

11 thoughts on “Renationalisation in Australia

  1. The government’s coming rescue of Virgin Australia Airlines appears to be in the form of debt that can, at the government’s option, be turned into equity. This will amount to a nationalisation.

    Fans of nationalisation will be happy. The government could rebrand it as TAA, for old-times’ sake.

    Though why anyone would want to be stuck with that business is not obvious.

  2. UK based. Shows what we need to look out for. Say, modellers like brian. Or “the [insert rentier think tank here] applied a 30% mark-up to the firms’ asset values. “.

    “Labour’s nationalisation plans should be debated – but not with misleading figures

    There are far bigger problems with the CBI’s analysis. For example, in calculating how much the government would pay for the companies operating in the industries it plans to nationalise, the CBI applied a 30% mark-up to the firms’ asset values. This is based on “evidence of historical takeovers which shows that utility companies have typically fetched a price above the asset value”. Yet this higher price reflects that, as essential services, they effectively enjoy a guarantee from government, as well as the value of economic rents that can be generated in monopolistic industries. This would not be a fair price. There is no reason why the government would pay for its own guarantee – nor should it pay for the rent extraction that nationalisation seeks to stop.

    “Even more fundamentally, the analysis only assesses the costs of nationalisation, rather than the potential benefits. It does not take into account income that would be generated by the companies brought back into public ownership – from ticket sales or energy and water bills, for instance. While the CBI was happy to reference future costs, including maintenance, running costs and investments, it hadn’t considered the asset side of the balance sheet.

    That’s a shame, because a genuine debate on public and private ownership would be welcome.

  3. The government appears to have nationalised the air freight of high-end seafood products to China and Japan. It will be interesting to see how it weans the millionaire crayfish and abalone fishing interests off this form of largesse when we reach the “other side”.

  4. Yes, I am astonished as this subsidy of fancy sea foods to the Chinese absolutist and millionaire elites. i am sure they get a big part of part of it. If these “millionaire crayfish and abalone fishing interests” can’t make a business of it by supplying this Australian seafood to Australians they can go out of business and let the sea stocks recover.

  5. Though why anyone would want to be stuck with that business is not obvious.

    I think it will be a monopoly once the same deal is extended to Qantas, so the case for public ownership is strong. Certainly the industry is looking at a long-lasting, perhaps permanent, contraction.

  6. From “Australia’s seafood trade” – Dept. of Agriculture – Updated Jan 2015.

    “Australia differs from many other developed countries in that a significant proportion of Australian product, which could otherwise supply the domestic market, is sold to export markets due to price. These products are generally still available in Australia, but Australian consumers are often unwilling to pay as high a price as export markets for the volumes produced.

    Australia exports high value products such as rock lobster, abalone, and tuna. Australia exports little of lower value staples such as white fish and canned fin fish products.”

    I don’t have the evidence to hand but I believe a similar thing happens with red meats like beef. High quality Wagyu and other good quality beef is largely exported and Australians receive mainly the remaining low quality beef, still at high prices by Australian standards. If there were not controls, much of Australia’s and New Zealand’s high quality infant formula would be snapped up at retail level and packaged off to China.

    Is there an economic concept or term for this effect? A nation produces a good quality product of some kind but its own population cannot afford it or could not afford it if global market processes were permitted to run in a completely unfettered market manner. I guess one term for it is being an undeveloped nation. Usually undeveloped nations are exploited like this. It seems that being a small developed nation also provides little protection against this effect, at least in less regulated markets.

    It raises the issue of the protection of populations modest in relative purchasing power or modest in absolute purchasing power against being product-stripped by global trade and larger and/or richer countries and left with inferior home product. I think Australia already suffers from this effect to some significant extent. Some of this trade which makes a few Australians into multi-millionaires is a disutiltiy to the rest of us.

    Note: I say this as a person allergic to crustaceans but not allergic to beef. (Can you be allergic to red meat? Yes, if bitten by some ticks in eastern Australia you can. You become allergic to a particular sugar only found in red meat which the tick injects with its toxins. The body becomes allergic to this sugar “by association” I guess.)

  7. The seafood story’s been in ABC radio news broadcasts today as well, so no doubt it’s on the ABC website.

  8. Apparently, if these businesses can’t make super profits selling to Asia, they are not interested in catching seafood for Australians. In that case, simply let the ravaged fisheries recuperate.

  9. The iron is hot. As Albo says “if it is worth doing it next week, we should do it today”.

    Renationalise private health NOW before the insurers “trouser their windfall billions.”

    “Research suggests funds should pass on to customers their fall in costs as elective surgery is cut.

    “The escalating financial instability of the industry led the regulator to warn in February that only three will be viable in two years unless urgent action is taken.

    “It sounds as if you’re not talking about a viable system or a product people want to buy,” Harvey said.

    “The thing is unsustainable, it’s undermining the public hospital principle of equity and allowing doctors to charge fees that take people out of the public hospitals.”

    “He said it was hard to estimate the impact of the pandemic on private health using publicly available figures, but the $3.5bn to $5.5bn range was a good starting point.

    “I think any detailed study would come up with figures that are in the range,” he said.

    Campbell said the insurers looked set to trouser their windfall billions.

    “Insurers claim to be supporting their members through the crisis by delaying premium increases, but they should be passing on these significant savings to households,” he said.

    “If the commonwealth does not ensure savings are passed on to customers, it will be one of the most egregious subsidies ever given to an industry already infamous for receiving handouts.”

    JQ also said;
    “Why can’t our leaders learn from 30 years of failure in health and education? John Quiggin

    “We’ve known since the 1980s that the profit motive doesn’t work in health and education. And the reasons why are no puzzle at all

    “This is ultimately an empirical question, and after 30 years of failure we have more than enough evidence to reach a conclusion. Across the human services sector, markets, incentives and competition rarely work better than non-profit provision and frequently lead to disastrous failure.”

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