Labour History

Labor, Government Business Enterprises and Competition Policy

Labour History (2010), 98, (1), 77–95.

Abstract

Long before the introduction of federal trade practices legislation or tariff reform, governments in Australia - especially Labor governments - attempted to reduce the costs or improve the quality of goods and services by establishing government business enterprises. With the rise of neo-liberalism industry policy of this kind all but disappeared. According to the National Commission of Audit (NCA), established by the Howard Government, there were only three circumstances in which Government Business Enterprises (GBEs) could be justified: when “the private sector was seen as incapable of delivering the required products or services”; when “the community considered it appropriate that government should own a firm that operated as a natural monopoly”; or when “the government wanted to fulfil a community service obligation”. This article offers a historically-grounded critique of the NCA’s position. It traces the history of GBEs as a spur to competition across the states and the Commonwealth. It shows that what counts, or doesn’t count, as a government’s “core activity” is as much a matter of politics as it is of economics, and it locates the politics of the NCA within the broader neo-liberal project of limiting collective choice.

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Endnotes

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2.Ibid., p.x; emphasis added. Google Scholar

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63.K. Wiltshire, ‘Privatising public enterprises’inJ. Halligan(ed.), Public Administration under Scrutiny: Essays in Honour of Roger Wettenhall, Centre for Research in Public Sector Management,University of Canberra and the Institute of Public Administration Australia,, 1996, p.192. Google Scholar

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65.NCA, Report to the Commonwealth Government, p.xiii. Google Scholar

66.ForWhitlam, seeC.J. Lloyd andG.S. Reid, Out of the Wilderness: The Return of Labor Cassell,, 1974, pp.238-39andWhitlam, The Whitlam Government 1972-1975, pp.286-87; for Queensland,S. Macintyre, The Oxford History of Australia Vol. 4 The Succeeding Age,Oxford University Press,, 1986, p.106; and forHolman, seeEvatt, Australian Labour Leader, p.167andParker, ‘Public enterprise in New South Wales’, p.222. Google Scholar

67.J.S. Mill saw‘State-run schools’existing, ‘if at all, only as competing experiments among others and to set standards of excellence for the private sector’;J. Skorupski, Why Read Mill Today?,Routledge,, 2006, p.51. For one survey on‘values large companies should show more of’, seeC. Benjamin, ‘Freedom, fairness and individualism: the value bases of Australia’s future’inI.C. Marsh(ed.), Australia Can Compete,Longman Cheshire,, 1988, p.201. Private sector resistance to the introduction of equal employment opportunity is noted in Collyer, et al.,‘Privatization and public enterprise reform in Australia’, p.157. Google Scholar

68.NCA, Report to the Commonwealth Government, p.viii. Google Scholar

69.On the early recognition of statutory authorities as a bulwark, however imperfect, from‘political control’seeF.W. Eggleston, ‘State enterprises and their organisation’, The Annals of the American Academy of the Social and Political Sciences, no.158, 1931, pp.228-35. Google Scholar

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72.C. Berg, The Growth of Australia’s Regulatory State,Institute of Public Affairs,, 2008, p.41. Google Scholar

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78.See, respectively,R. Baxt andM.D. Brunt, ‘A guide to the Act’, Australian Economic Review, reprinted inNieuwenhuysen, Australian Trade Practices, 1974/1976, p.88andG. de Q. Walker, ‘The Trade Practices Act at work’, inNieuwenhuysen, Australian Trade Practices, p.146. Google Scholar

79.Hilmer, National Competition Policy, p.11. The increasing concern of private business with the growth of‘the regulatory state’, a growth ‘not discouraged by the reduction of government-owned businesses’, is registered in Berg, The Growth of Australia’s Regulatory State; p.39for the quote. As Braithwaite notes, the Howard Government’s attempts, in some areas, to both privatise and deregulate landed it in political trouble;, Markets in Vice, Markets in Virtue, p.9. Google Scholar

80.M. Painter, ‘Economic policy, market liberalism and the “end of Australian politics”’ Australian Journal of Political Science, vol.31, no.3, 1996, p.295. Google Scholar

81.A.F. Davies, ‘Nationalisation’inA.F. Davies andG. Serle(eds), Policies for Progress: Essays in Australian Politics,F.W. Cheshire,, 1954, p.67. Google Scholar

82.N.G. Butlin,A. Barnard andJ.J. Pincus, Government and Capitalism: Public and Private Choice in Twentieth Century Australia,George Allen & Unwin,, 1982, p.236for the quotation. Google Scholar

83.Parker, ‘Public enterprise in New South Wales’, p.209. Google Scholar

84.Macintyre, The Oxford History of Australia, p.106;Macintyre, The Labour Experiment,McPhee Gribble,, 1989. Google Scholar

85.Groenewegen andMcFarlane, in theirA History of Australian Economic Thought, make no reference to any work of this kind. Google Scholar

86.J.B. Brigden, ‘State enterprises in Australia’, International Labour Review, vol.16, 1927, pp.34. Compare the earlier judgment of Meredith Atkinson on GBEs of all kinds: ‘On a purely profit and loss basis, State undertakings in Australia cannot be judged a success, though that is not the fairest test to apply to them’; Atkinson,‘The Australian outlook’inM. Atkinson(ed.), Australia: Economic and Political Studies,Macmillan,, 1920, p.17. Google Scholar

87.Parker, ‘Public enterprise in New South Wales’, pp.220-21. This echoes the views of Bland,‘The administration of government enterprises’, p.14, andBrigden, ‘State enterprises in Australia’, pp.39-40. In Greenwood, by contrast, those responsible for ‘quietly discarding the state enterprises which Labour had earlier established’ are described simply as‘the more practical politicians’;G. Greenwood, ‘Development in the twenties’inG. Greenwood(ed.), Australia: A Social and Political History,Angus & Robertson,, 1955, p.332. Google Scholar

88.G.A. Hodge, Privatization: An International Review of Performance,Westview,, 2000, p.225-27. See also:Wiltshire, ‘Privatising public enterprises’, p.192ff, who includes a list of things that need further research; andY. Aharoni, ‘The performance of state-owned enterprises’inP.M. Toninelli(ed.), The Rise and Fall of State-Owned Enterprise in the Western World,Cambridge University Press,, 2000, p.51, which concludes that ‘empirical research’ on whether ‘ownership per se creates an environment that is conducive to high or low performance … has yielded conflicting results’. Google Scholar

89.B. Rowthorn, ‘The Thatcher revolution’, p.288. Unfortunately, the review of short-term pricing changes, undertaken by the Productivity Commission, largely restricted to monopolies; Productivity Commission (2005)Review of National Competition Policy Reforms, Report no. 33,, /www.pc.gov.au/__data/assets/pdf_file/0016/46033/ncp.pdf, Accessed 20 January 2010. See alsoAlan Fels andFred Brenchley, ‘Taxpayers get poor returns’, Australian Financial Review, 26July2005; they ask, on the basis of this review, whether it is ‘worthwhile retaining the GTEs in public ownership’ only to conclude ‘we cannot tell’. Google Scholar

90.J. Quiggin, ‘Privatisation debunked’, Australian Financial Review, 5November2009;Quiggin, Great Expectations, p.159. Quiggin’s position is hardly novel: ‘State conducted activities are so varied in character and have met with such varying success..thatany generalisationon their efficiency or advisability is impossible. Each case must be considered carefully on its own merits.. Noa prioriformula can possibly be laid down’;J. Alexander Gunn, Livelihood: Papers in the Study of the Economic Factor for Social Science Students,A.H. Massina & Co.,, 1927, p.197(emphasis in the original). Judging ‘each operation of the government on its individual merits’ was also said to be the view of the public early in the twentieth century;V.S. Clark, The Labour Movement in Australasia: A Study in Social-Democracy,Burt Franklin,, 1906, p.278. Google Scholar

91.J. Quiggin, ‘The future of government: mixed economy or minimal state?’ Australian Journal of Public Administration, vol.58, no.4, 1999, p.51. See alsoJ. Quiggin, ‘The future of public ownership in Australia: privatisation or re-nationalisation?’inR.R. Officer andJ. Quiggin, Privatisation: Efficiency or Fallacy? Two Perspectives, Committee for Economic Development of Australia, Paper No. 61, 1999. Contrast this with Hugh Emy’s curiously ahistorical view that while‘Governments can help to create the right cultural and institutional conditions’in which companies might pursue their competitive advantage, ‘governments cannot themselves create competitive industries’;H. Emy, Remaking Australia: The State, the Market and Australia’s Future,Allen & Unwin, 1993, pp.188-89, 195. Google Scholar

92.National Commission of Audit, Report to the Commonwealth Government, p.vii. Google Scholar

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94.Goot, ‘Public opinion, privatisation and the electoral politics of Telstra’, p.215.Collyeret al, observe that‘it has been easy enough for the conservatives to argue that ordinary Australians’, who don’t like privatisation,‘do like the idea of tax reductions and that they cannot have it both ways’;Collyeret al, ‘Privatization or public enterprise reform?’ pp.156-57. Google Scholar

95.H. Collins, ‘Political ideology in Australia: the distinctiveness of a Benthamite Society’inS.R. Graubard(ed.), Australia: The Daedalus Symposium,Angus & Robertson,, 1985, p.158and ‘“A vast public utility”: the state in Australians’ experience and expectations’ inM. James(ed.), Restraining Leviathan: Small Government in Practice,Centre for Independent Studies,, 1987, p.53. In their chapter on the‘Strategic planning model for privatisation’, whatM. Lawriwsky andC. Kiefel understand by ‘the people’ are ‘the major interest groups’; see,K. Davis andI. Harper(ed.), Privatisation: The Financial Implications,Allen & Unwin,, 1993, pp.37-8. Google Scholar

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Goot, Murray