Canberra Goes Private: Selling off state-owned enterprises benefits Australians
February 22, 2014 Leave a comment
Canberra Goes Private
Selling off state-owned enterprises benefits Australians.
Feb. 13, 2014 12:01 p.m. ET
Finance ministers from the G-20 converge on Australia next week, and they might learn something from their host government in Canberra. Prime Minister Tony Abbott’s government has set out to privatize public assets worth up to 130 billion Australian dollars ($117 billion).
Joe Hockey, Mr. Abbott’s treasurer, floated that number and pressed the case for privatization in an interview with the Journal’s Rob Taylor and David Winning this week. The government views the proceeds from asset sales as a way to manage debt levels while funding new public-works projects. “We are going to free up the capacity to get on with the job of building things,” Mr. Hockey said. His statement is the latest development in a policy drive that’s been gaining speed since January.
Australians already know a thing or two about privatization. The first tranche began in earnest in 1991 when Canberra sold off the Commonwealth Bank, CBA.AU +0.32%and since then the federal and state governments have spun off electric utilities, insurance companies, airport operators, former flag-carrier Qantas QAN.AU +2.53%and a large chunk of the former telecom monopoly Telstra. TLS.AU +0.97% These earlier moves provided a fiscal shot in the arm for the government and freed taxpayers of the burden of supporting inefficient enterprises.
They have attracted foreign investors to Australia while locals enjoyed a return from these assets too. That explains why managers at the so-called superannuation funds that manage the country’s government-mandated individual retirement accounts are so enthusiastic about the latest privatization proposals. They appreciate the benefits for ordinary Australians both of putting the government’s finances on a more stable footing and of creating a broader and deeper capital market via new share issues.
Targets in Mr. Hockey’s round could include electric utilities still owned by some states, health insurer Medibank, Australia Post, the air-traffic-control system, the company that provides housing to members of the military, and public-works operators such as the one that maintains railroad tracks.
The idea of more asset sales already is drawing criticism from the usual quarters, as did the previous rounds in the 1990s and 2000s. Messrs. Abbott and Hockey deserve credit for pushing ahead despite the inevitable controversies. If they succeed, they’ll set a positive example for their G-20 peers.
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