Additional Comments by the Australian Greens
1.1
The Australian Greens believe that public assets should remain in public
hands unless there is a very compelling case for them to be sold. This senate
inquiry into the privatisation of state and territory assets and new
infrastructure has elicited important evidence demonstrating that selling
public assets presents significant risks to the public interest, and that it is
not a way to solve revenue problems.
1.2
The committee report is an excellent summary of the risks and issues
involved when infrastructure funding is linked to privatisation. It is a clear
exposition of the safeguards and accountability measures required when
privatisation is considered. The evidence provided shows that is it vital to
protect the public interest from sell-offs, which lead to higher prices, job
cuts, attacks on workers’ pay and conditions, declining services, and reduced
revenue to state governments.
1.3
The Greens have opposed the government’s Asset Recycling Initiative as
an incentive to privatise assets. We believe that bribing financially stretched
State Governments to sell assets in return for funding expensive urban freeways
and tunnels shows a poverty of vision when it comes to funding for new
infrastructure.
1.4
The Abbott government’s Asset Recycling scheme is designed to push state
and territory governments to privatise their public assets. ‘Asset recycling’
involves 15 per cent "bonus" payments to state governments that sell
public assets and use that money to pay for so-called new infrastructure —
mainly big privatised road projects. The report includes evidence that this 15
per cent incentive figure was determined not through any kind of economic
analysis or analysis of loss of revenues associated with asset sales, rather it
was decided upon as an apparently arbitrary figure following negotiations between
the Commonwealth and state and territory governments.[1]
1.5
The Greens echo the contributions of several witnesses recorded in the
report, who provided evidence for seeking alternative funding mechanisms for
infrastructure. We agree with the evidence of Mr Stephen Koukoulas who observed
that, if it is worthwhile undertaking public infrastructure spending, it should
be done regardless of whether there is asset recycling, and that it should be
based on need and not any other incentive.[2]
1.6
While we support the overall intentions of the recommendations contained
in the report, the Australian Greens feel that stronger emphasis needs to be
placed in order to take into account the issues noted in these comments. We
propose the following revisions to the report’s recommendations.
Recommendation 1
1.7
The Australian Greens recommend that proper and rigorous analysis of
total costs and projected benefits associated with privatisation projects be
conducted when privatisation is proposed by governments at any level.
Appropriate public consultation should be undertaken as part of this analysis,
including consultation around transactions costs, the cost of creating an
appropriate regulatory environment and compliance with those arrangements, the
value of foregone income from state owned assets and appropriate discount rates
to be applied to financial analysis.
Recommendation 2
1.8
The Australian Greens recommend that prior to proposed privatisation of
assets, governments at all levels introduce appropriate regulatory arrangements
and safeguards, including safeguards against anti-competitive behaviour to
ensure that future costs are known and established; and mechanisms to ensure
transparency of operations of the privatised entity.
Recommendation 3
1.9
The Australian Greens recommend that the 15 per cent funding to states
under the Asset Recycling Initiative should be abolished. Decisions to fund
infrastructure projects should be based on the community and economic need. The
Commonwealth should contribute funding based on the merits of proposed
infrastructure projects while considering the equitable distribution of funds
across states and territories.
Senator Janet Rice
Australian Greens
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