September 16th 2006

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Articles from this issue:

EDITORIAL: Quarantine: time is running out

CANBERRA OBSERVED: Flogging off the last of the family silver

NATIONAL AFFAIRS: Opening door to embryo experimentation

MEDIA: Time to be angry at media bias

NATIONAL SECURITY: Re-thinking our response to terrorism

STATE POLITICS: Queensland goes to the polls

PREGNANCY COUNSELLING: Pro-life pregnancy counselling in jeopardy

OPINION: Dads lost in cloud cuckold land

TAIWAN: Taiwan's latest bid to gain UN membership

EDUCATION: Can parental choice fix our schools?

SCHOOLS: Can we interest students in Australian history?

CULTURE AND CIVILISATION: Contemporary threats to Western society

OPINION: Knifed on altar of free trade

CINEMA: September 11 heroism remembered in United 93

BOOKS: RESPONSIBLE MANHOOD: Reflections on what it means to be a man, by Winston Smith

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Flogging off the last of the family silver

News Weekly, September 16, 2006
One of the long-running myths in federal politics is that the privatisation of public utilities and other organisations has been popular policy.

Nothing could be further from the truth and, as the Howard Government is finding out with the last remaining asset sales now on the table, it will be hard-going to convince the public it is still doing the right thing.

The unpopularity of the policy has been largely masked by the windfalls enjoyed by those lucky enough to be at the ground floor of the early floats.

And the hundreds of millions of dollars which have flowed to the financial advisory sector and stockbrokers from the privatisations have kept them spruiking their virtues and arguing the necessity of further sales.

Crown jewels

The easiest assets and the jewels in the crown of public ownership - the Commonwealth Bank, the Commonwealth Serum Laboratories and Qantas - were sold off by the former Labor Government and were snapped up by the market public at bargain-basement prices.

The Howard Government appeared to do well with the initial float of Telstra, but subsequent events have proved this to be a mirage.

Now the Government is faced with trying to offload the dregs of its public assets - the last tranche of Telstra and Medicare Private.

So far its arguments for selling have been far from convincing.

Telstra is being sold off at a time of international turmoil, when it is close to a record low share price, and with an uncertain management structure.

At the same time, Telstra's U.S. management has pulled the plug on a vital $4 billion optic-fibre upgrade of the copper-wire network to neighbourhood nodes.

The Government appears desperate to rid itself of the remaining 50 per cent of the company so it will no longer have to take responsibility for the nation's communications infrastructure.

There is no urgency for the sale, apart from the Government's unbendable ideological position on privatisations.

Meanwhile, commentators are making the point that Australia is actually rapidly slipping down the table of technologically-equipped western nations.

Competition and government telecommunications policy is simply not delivering the same powerful broadband networks which are being rapidly laid out overseas.

Most of the focus in recent times has been on fears that "the bush" and regional Australia could be left behind in the broadband revolution.

In fact, Australian cities may soon realise that their overseas competitors have superior communications linkages.

Respected Canberra columnist Laurie Oakes recently argued that the black hole in communications policy could hurt the Government at the ballot box.

"The failure to give Australia the kind of broadband infrastructure available in most other developed countries also has the potential to hurt Howard electorally," Oakes wrote in a recent Bulletin article.

"Voters in the bush were the ones most worried by Telstra privatisation, but urban professionals make up the constituency particularly concerned about the lack of super-fast broadband. There is increased muttering in business circles about this."

Labor's policy of keeping Telstra in government hands and spending billions on infrastructure is, at least in the short term, a more sensible policy.

The other proposed sale - Medibank Private - is even more dubious and unpopular.

The Government says the sale of the largest private health insurer will not affect premiums, but will add to competition in the sector.

No one outside the Government believes this claim.

Even the Australian Medical Association - normally one of the Government's strongest allies - has come out opposing the sale.

AMA president Dr Mukesh Haikerwal declared the association was opposed to any reduction in competition in the private health insurance sectors.


Dr Haikerwal said members would be the losers if the sale goes ahead. "The purchaser of Medibank Private will inflict costs on themselves and that will be born in terms of increased premiums by the current shareholders or the current members," he said.

To make matters worse for the Government, they have so far cut the policy-holders out of the action.

There is a strong argument for giving Medicare Private policy-holders shares in the coming float, or at least strong incentives for taking them up.

There are 1.3 million members of Medicare Private, covering almost three million Australians.

These members will be very angry, not only to miss out on shares in the fund they supported and built up over the years, but also to be hit with bigger premium rises once the company is floated.

That's a lot of votes the Government risks losing.

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