Privatisation has damaged the economy says ACCC chief

ACCC chairman Rod Sims
Patrick Hutch (The Sydney Morning Herald 27 July 2017) reports that Rod Sims, the head of the Australian Competition and Consumer Commission (ACCC), stating that the sale of public assets has harmed the Australian economy. Many voices have been saying the same for years. When someone in Rod Sim’s position says it, can there remain any room for doubt?

Selling public assets has created unregulated monopolies that hurt productivity and damage the economy, according to Australia’s consumer and competition tsar, who says he is on the verge of becoming a privatisation opponent.

In a blistering attack on decades of common government practice, Australian Competition and Consumer Commission chairman Rod Sims said the sale of ports and electricity infrastructure and the opening of vocational education to private companies had caused him and the public to lose faith in privatisation and deregulation.

ACCC chairman Rod Sims says privatisation is hurting productivity.

“I’ve been a very strong advocate of privatisation for probably 30 years; I believe it enhances economic efficiency,” Mr Sims told the Melbourne Economic Forum on Tuesday.

“I’m now almost at the point of opposing privatisation because it’s been done to boost proceeds, it’s been done to boost asset sales and I think it’s severely damaging our economy.”

Deregulating the electricity market and selling poles and wires in Queensland and NSW, meanwhile, had seen power prices almost double there over five years. Photo: Glenn Hunt

Mr Sims said privatising ports, including Port Botany and Port Kembla in NSW, which were privatised together, and the Port of Melbourne, which came with conditions restricting competition from other ports, were examples where monopolies had been created without suitable regulation to control how much they could then charge users.

“Of course you get these lovely headlines in the Financial Review saying ‘Gosh, what a successful sale, look at the multiple they achieved’,” Mr Sims said.

“Well of course they bloody well did: the owners factored in very large price rises because there’s no regulation on how they set the price of a monopoly. How dopey is that?”

Mr Sims, who recently launched legal action against Medibank Private alleging it concealed changes to health insurance policies to boost profits ahead of its privatisation, said billions of dollars had been wasted in the scandal-plagued vocational education sector since it was opened up to the private sector.

A deal to privatise the Port of Melbourne was struck in March with conditions that restricted competition from other ports.  Photo: Joe Armao

Deregulating the electricity market and selling poles and wires in Queensland and NSW, meanwhile, had seen power prices almost double there over five years, he said.

“When you meet people in the street and they say ‘I don’t want privatisation because it boosts prices’ and you dismiss them … recent examples suggest they’re right,” he told the room of influential economic and policy experts.

“The excessive spend on electric poles and wires has damaged our productivity. The higher energy price we’re getting from some poor gas and electricity policies are damaging some of our productive sectors.”

Mr Sims said he was growing “exasperated” as governments including the Commonwealth became more explicit in trying to maximise proceeds from asset sales.

“I think a sharp uppercut is necessary and that’s why I’m saying: stop the privatisation,” he said.

Mr Sims also used the forum to continue a public stoush with opponents of a proposed “effects test”, saying they were relying on “bogus” arguments against the Harper review proposal to give the ACCC powers to block action that had the purpose or effect of substantially lessening competition.

The Productivity Commission last week joined the Business Council of Australia, the federal Labor opposition and the supermarket giants in opposing the so-called “effects test”, which is a pet policy of National Party MPs including Deputy Prime Minister Barnaby Joyce.

 

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