That’s the headline for my latest piece in Independent Australia. Opening paras
AS WE WAIT anxiously for the arrival of a COVID-19 vaccine, which will be made overseas, most Australians will welcome the news that a new vaccine manufacturing plant will be built in Melbourne to produce vaccines for influenza and Q fever (and possibly for future pandemics), as well as antivenenes for snake and spider bites.
The plant is the result of a deal between the Commonwealth Government and Seqirus, a subsidiary of global biopharmaceutical firm CSL. Under the deal, the Commonwealth commits to pay $1 billion over ten years for a variety of products including antivenenes.
At this point, those with long memories might recall that the “C” in CSL once stood for “Commonwealth” and that the Commonwealth Serum Laboratories began producing vaccines and antivenenes more than 100 years ago. Under public ownership, CSL developed both polyvalent antivenene against all the major Australian land snakes and the first Q fever vaccine. Why then, are we paying nearly $1 billion to a company we once owned to provide pharmaceutical products that were developed when we owned it?
Concluding para
In 30 years of privatisation in Australia, there has not been a single case where the public would not have been at least as well off if the asset had remained in public ownership. Turning this around, there is now a strong case for renationalisation of a wide range of private assets, including roads, electricity transmission and distribution network and airports. It is time to call the failed experiment of privatisation to a halt.
John Quiggin 
Keating was a traitor just like Hawke and Howard. All of them were traitors to the common good and to the working person. The whole privatization thing was a huge swindle.
J.Q., you probably could have and should have made yourself a multi-millionaire, if not billionaire, on your understandings at the time. You could have done it in a such way that, before acquisitions, you signaled in a sealed, witnessed, statutory document and testament, your intention to so profit and then to donate the entire windfall profits, sans return of capital and standard interest, to charitable foundations. Then, you could have made much public intellectual capital out of lambasting the entire process as run by Keating et. al. and done so from an impeccable moral (and economic analytical) position.
It was and is a scandal. The perpetrators should all be in prison but such people aren’t criminals, by definition, because they make both the laws and the dodgy deals permitted by those laws.
It is an excellent article and I mostly agree with it. Except the voting public and the bandwagon groupthink media are as much to blame as the politicians.
I would like a clearer delineation of what type of asset should be renationalised and why. Natural monopoly seems to be top of the list, possibly followed by provision of extra competition to oligopoly.
So roads, rail, electricity transmission and distribution networks, telecommunications networks, pipelines, dams, ports, airports first, and more investment in the post office and public health, then some competition for banks. Airlines might be a tricky one.
As you point out elsewhere the whole lot can be bought back right now financed by zero interest debt. What would the lot cost I wonder ?
We would of course be back to the problem of Governments’ penchant for gold-plating, white-elephanting and pork-barrelling – so endless vigilance is the price of utopia.
But while CSL was indeed given away, is there a case for public ownership ?
A key issue is why it was privatized for a song.
Harry Clarke,
Yes the sale price was so wrong that one has to suspect outright criminality or criminal incompetence. Either way, it was morally criminal and would have been legally criminal if we had had decent laws in place. It’s one of the many reasons why I have long detested the class traitor Keating who was Australia’s Thatcher and Blair, with all the worst qualities of both rolled into one person.
Actually, the management post-float (the tennis-player’s brother) turned a really well run government manufacturing enterprise built on good R&D (G. Mitchell should get a lot of credit) into an international giant with much more than half of its business overseas. Two questions for PrQ: would this have happened if the GBE had stayed owned by the nation? And is it a bad thing?
I am against privatisation but these questions need answers. (I have not read the whole article.)
I had a tour of CSL. Very impressive facilities and leadership (after one try they realised that the company needed a head who understood what they actually do – ie a scientist). The key to their success was resin separation of plasmas – a technology they developed while in public ownership (by all those boring, hide-bound, cardigan-wearing, un-innovative public servants). The new factory was needed to move to industrial scale.
Not the only example, sad to say.
The capitalist economy is simply a theft machine. So much stolen from workers it is incomprehensible. So much stolen from nature, that nature is destroyed. The “Game of Plunder” is over. Nothing but collapse to come now.
John, Lesson 3. Government failure. Commonwealth Serum Laboratories embodied that. CSL overcame that.
I notice JQ now limits his renationalization proposal to electricity transmission and distribution, not generation. Renewable wind and solar energy lend themselves to distributed production, in the case of solar even by single households. The argument for competition in generation (and now storage) has got stronger, Since distributed generation places a greater burden on the public functions of regulation and market-making provided by or through the monopoly grid, it simultaneously strengthens the argument for running the latter as a public service. Generation and storage do not have to be on the capitalist model; there is plenty of room for cooperatives and municipal enterprise.
Thanks John. Another important privatisation article, written with clarity.
How did investors in CSL receive a multiple of 500 times their investment? Just the increase in share price on the market, or does this include dividends, and over what time frame?
@Dave Increase in share price, taking account of buybacks, since 1994. Doesn’t include dividends.
@Andrew Do you have any basis for this assertion?
@James Agreed
Andrew says “Government failure. . … CSL overcame that”. Id be interested in a basis for your assertion too. As in nobbled?
Like this?
“Coalition to cut $2 billion a year from university research
…” Doherty says. “And if we don’t, we’ll look more like a bunch of hicks who dig stuff out of the ground and do nothing else.”
“He says that while medical research is a strong sector outside the academy, almost no other field is. And even medical research, he qualifies, relies on university graduates to perform the work of innovation and advancement.
“Doherty points to the example of CSL Limited, the former Commonwealth Serum Laboratories, established in 1916 by the Australian government and privatised in the early 1990s.
“CSL can make two variants of the Covid-19 vaccine,” Doherty says. “It could easily have been bought out and moved offshore and we would have no capacity as a nation to manufacture these drugs. Why is it still here? Because they draw off the university talent.”
https://www.thesaturdaypaper.com.au/news/politics/2020/09/26/coalition-cut-2-billion-year-university-research/160104240010465
Or nobbled llike this…
Mr MICHAEL DALEY (Maroubra) [3.43 p.m.]: … “… The Premier’s response is to slash $1.7 billion from education and destroy TAFE. If there is one lever that a government can pull to nobble its future economic prosperity it is to rip into the education sector. That is what Premier Mike Baird is doing. Add to that Malcolm Turnbull’s cuts, which are to begin next year, of $1 billion to education. Premier Mike Baird’s only offering to get people back into work is to burden families with a 50 per cent rise in the goods and services tax. He wants to araldite to that economic shock, leaving bracket creep in place until the mid-1920s. Ripping young people out of work and destroying TAFE is not something members of the Government should come in here and crow about.”…
https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1323879322-73215/link/27
In the modern context, government fails (including failing to assist workers, the poor, equality issues and ecological sustainability issues) occur due to regulatory capture and governance influence by donating businesses and corporations. The real fail is the socio-political failure to control elite and special interests and capitalistic influence.
Pushing further neoliberal policies is absurdly unwarranted in the face of the egregious failures of US and EU neoliberalsim with respect to the litany of economic and social disasters of the last three decades and culminating in the COVID-19 debacle. Claims that neoliberalism works are entirely threadbare.
Andrew, was the government owned Commonwealth Serum Laboratories in a habit of counting a shed out the back as a “second location” in order to meet the requirements for stockpiling critical medical supplies?
The only reason for pause in the criticism is that no tax money is or has been spend in this privatisation saga. Every cent the commonwealth spends is new created money. Unfortunately it looks stupid so the argument that it costs us nothing is still a cogent mash up of the political mistaken thinking. Boy they sure stink! Their incompetence saves them from having to own up to spending taxpayer dollars. One hardly knows whether to laugh or cry.
Andrew “Government failure” aka ‘to Nobble’ – like this?
“Coalition to cut $2 billion a year from university research
…
…” Doherty says. “And if we don’t, we’ll look more like a bunch of hicks who dig stuff out of the ground and do nothing else.”
“He says that while medical research is a strong sector outside the academy, almost no other field is. And even medical research, he qualifies, relies on university graduates to perform the work of innovation and advancement.
“Doherty points to the example of CSL Limited, the former Commonwealth Serum Laboratories, established in 1916 by the Australian government and privatised in the early 1990s.
“CSL can make two variants of the Covid-19 vaccine,” Doherty says. “It could easily have been bought out and moved offshore and we would have no capacity as a nation to manufacture these drugs. Why is it still here? Because they draw off the university talent.”
https://www.thesaturdaypaper.com.au/news/politics/2020/09/26/coalition-cut-2-billion-year-university-research/160104240010465
Or llike this…
Mr MICHAEL DALEY (Maroubra) [3.43 p.m.]: … “… The Premier’s response is to slash $1.7 billion from education and destroy TAFE. If there is one lever that a government can pull to nobble its future economic prosperity it is to rip into the education sector. That is what Premier Mike Baird is doing. Add to that Malcolm Turnbull’s cuts, which are to begin next year, of $1 billion to education. Premier Mike Baird’s only offering to get people back into work is to burden families with a 50 per cent rise in the goods and services tax. He wants to araldite to that economic shock, leaving bracket creep in place until the mid-1920s. Ripping young people out of work and destroying TAFE is not something members of the Government should come in here and crow about.”…
https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1323879322-73215/link/27
This is a significant example given that at one time the CIS, IPA, et al, were spruiking CSL as an example of a successful privatisation.
John
Are their privatisations that you think were sensible?
I’m reminded of the settlement of the CSIRO wi-fi intellectual property case. A technological innovation key to the whole ICT environment was apparently only worth around $1 billion, or less than 1/1000 of the capital value of but one of the major tech companies defending the action. I’d love to know who brought the pressure to settle on these terms, and what goodies have come their way in post-parliamentary life.
[…] to outsource and privatise things that aren’t yet privatised, even though on one estimate none of Australia’s privatisations over the past 30 years has ended up benefiting the […]
[…] to outsource and privatise things that aren’t yet privatised, even though on one estimate none of Australia’s privatisations over the past 30 years has ended up benefiting the […]
TND has published an article today, History repeats itself again and again: The story of local hero Commonwealth Serum Laboratories, in dire need of more up to date facts and context. This brought to mind the above JQ post and article and things that might be said to put them and their readers straight. However, as TND and particularly their patrons owe their very existence, generous remuneration, and ownership of numerous formerly public owned assets to Paul Keating I doubt they would allow sensible comment nor amend their article in that regard.
https://thenewdaily.com.au/life/science/2021/03/27/csl-history-coronavirus-vaccine/
[…] from overseas. Slow supply has led to a slow vaccine rollout. Now, the Federal Government is paying $1 billion over ten years to CSL, which it sold off, to ramp up production facilities for the […]