Uneducated economist here, but why do the Libs (I'm looking at the NSW LNP ATM) like selling public assets to build more infrastructure instead of going into further debt? Govt debt is a lot different to personal debt so the same rules don't apply.
I understand their S&P ratings may go down which means their interest rate may go up but I see govt debt as justified if it means increased infrastructure spending whilst still owning all of the public infrastructure.
Downvoted by the ex-treasurer Josh Frydenberg Scott Morrison
Medibank Private and Telstra going public made a lot of money for the Australian taxpayer while not costing users a whole lot.
Abbott sold Medibank for $5.79b. In today's dollars that would be roughly $7.3b, it's current market cap is $8.4b, and made very roughly around $380m per year in profit since 2016, roughly totaling $2.6b in profit since then… kinda seems like the Australian taxpayer lost there.
Depends what you did with the $5.79b..
Compound returns would be pretty significant if put into infrastructure.
@Geoffk7: But thats the other thing Libs love to do with infrastructure - public private partnership. The private partner gets to privatise all the profit and socialise the losses.
@Geoffk7: The infrastructure where the money was used to built doesn't even end up being owned by the government and we as citiizens still get billed to use it. eg Toll roads.
@JoBevo: Its not just the Liberal party Labor are just as bad with Privatising stuff, the ALP sold Commonwealth Bank back in the 198s. Plus they don't care what happens as they all still get the full pension plus free flights and all the other benefits.
The politicians are set for life while the rest of us suffer.
All they care about is getting voted in on election day.
One reason Medibank and Telstra worked was the competitive environment ultimately turned out to be right. There were other health insurers and communication companies who could keep prices down for users.
If a state sold-off its entire public transport system, it might not go as well. Nobody is actually challenging public transport directly, Uber/Lyft/car shares are significantly more expensive and have worse environmental outcomes (bad externalities). Also the government is probably on the hook for ever-increasing subsidies to keep prices reasonable. In essence all it has done is sold something for some quick cash, while inflicting long-term pain.
Much infrastructure falls somewhere in between, a road/bridge/highway may be more like the public transport example (not having great competition/alternatives), while a power generator may be more like the Medibank example (not really turning out to be a big deal in the long run).
I wouldn't say the sale of Telstra worked. They are the main reason why the NBN had to be built.
Telstra went public in 1997/98, The infrastructure was already a basket case due to the way it had been run for the previous few decades. NBN was proposed in 2007. No way Telstra had the money or time to fix what was broken in that timeframe.
@gromit: Maybe not completely, but ten years is more than enough to get a significant chunk of it fixed. It's been less than that since most of the country has been on some form of NBN and a couple of years since they started what's essentially NBN v2 with the upgrade from FTTN to FTTP. If they'd gone FTTP in the first place most of us would have been running it for years.
@Typical16-bitEnjoyer: @zeggie You should be angry. Those HFC infrastructures were bought at a premium and cost an absolute bomb to maintain. Optus and Telstra were both in the process of decommissioning HFC when Libs walked in and offered them 100s of millions for an asset which had zero book value.
@brandt: Yup, and let's not forget those flush maintenance contracts they got as well, despite receiving millions already, sigh. Basically corruption really.
@banana365: The NBN worked well for Telstra as the Government gave them the contract to install a lot of it and they sold their old HFC and Copper networks back to the Government and made a nice profit. Plus now if anything goes wrong they just push the blame back onto the NBN Co.
@Chaddy: Not only that, NBN then paid Telstra to fix the copper networks that Telstra had neglected for decades. 😡
@banana365: There's a question on how well that would have gone through covid lockdowns if the MTM didn't come in.
A large proportion of FTTP installs failed because the LICs were too small to fit the fibre connectors through, of they were damaged. Not needing to trench every front yard in the country meant a huge proportion of the country got better than ADSL service sooner than they would have with a FTTP rollout.
Working from home for 6 months in Vic would have been a lot worse for me on my previous ADSL service than the FTTN service I had.
@gromit: Isn't that flawed logic though?
The whole premise of privatisation for better efficiency and a better run company was a fallacy in the case of Telstra.
Perhaps it was better run in terms of maximising profit but in terms of foresight for the upcoming internet age, one would deem it a failure.
Of course, many conservatives are also Luddites so I guess in hindsight, what has happened is now very obvious and was to be expected.
I refer back to PJK's wonderful parliamentary tirade on the "cultural cringe" of the LNP on Feb 27 1992 - 21 years ago.
Very sadly still relevant today when speaking about the LNP and their decisions regarding technology and infrastructure.
I personally turned on the LNP on the basis of the NBN disaster alone and now happily vote against my self interests for the pipe dream of a better country for all.
I refer back to PJK's wonderful parliamentary tirade on the "cultural cringe" of the LNP on Feb 27 1992 - 21 years ago
I've got some bad news for you.
@gromit: Telstra had the money, and had the borrowing capacity as well. Telstra refused to spend on a new network purely based on having to open the infrastructure up to wholesale customers. They also refused to agree with pricing guidelines that the government needed. They were offering wholesale prices at the same price as retail. It was managements arogance that tanked Telstra.
A major part of Telstra was put into Future Fund.
Not many people realise that $60b was put into Future Fund and it is now worth around $200b
That’s a pretty good dividend for the Australian people.
Now the trick is to keep fingers out of it.
Before telstra getting a phone line cost $300ish? + install fees. And a month wait.
After, $68? And you could use other companies.
NBN ha. Before NBN tpg was building exactly what NBN will be, in select areas. Others were planning in their own areas. telstra had velocity.
NBN announced, tpg dropped plans, 10+yrs and billions of printed money after, those areas are now what they would have been anyway.
I mean the rural area benefitted. Free satellite links etc that no company would have paid for.
Selling off the SEC/coal-fired power stations/DNSP was the worst thing the gov ever did for my area.
Yes, a lot of peeps on huge wages who did practically no work day to day unfortunately lost their jobs and received massive payouts. Sad.
@Typical16-bitEnjoyer: Not only did it have a large negative impact on the LaTrobe Valley with commerce & culture, but it was also proven that the private companies lacked investment into safety for little things like maintenance on an open-cut sprinkler system to the point where Hazelwood mine was shooting fireballs all around the area.
The shutdown of their leased/owned places is a simple 'wipe the hands of it' and has left taxpayers with the bill of demolition and rehabilitation of the mine, which the local/state gov really has no idea what to do with it as even the proposal of 'filling the hole with water' is apparently, expensive.
@A-mak: I have no idea how old you are, but that's a combination of boomer talk and outright untruths. Half my family worked at the power stations there and some spit out the same crap, whilst ignoring how much they profited and benefitted in the following 20 years from privatisation.
The Valley didn't die in the 90s. It boomed. It didn't die after Hazelwood closed. It boomed. It won't die after Yallourn and Loy Yang A/B close. Look at the towns right now, they are absolutely booming. House prices are astronomical. More businesses than ever. There's plenty of commerce, plenty of culture, and plenty of money.
Taxpayers aren't paying for the rehabilition of Hazelwood. ENGIE is. Feel free to actually read the Rehabilitation Project statements to see what is happening, and pretty much on schedule as well.
@Typical16-bitEnjoyer: Morwell is being propped up by government investment.
Housing market is strong because median land prices make it a good investment to avoid land tax and the rail line makes it viable to travel to melb for work.
The actual mine itself was privatized in 96 whereas the area started declining 2000's. I suggest you go there and have a walk around the CBD, see how great it is business-wise; there absolutely is not "more business than ever". Even Churchill is still in decline in open businesses. However, due to the privatization the area has already adapted to the power stations not being the largest employers and is used to the struggle.
The area has not 'boombed', if it did there would be a bypass around Traralgon already.
I suggest you go there and have a walk around the CBD, see how great it is business-wise
I'm regularly in Traralgon for work. It's booming.
Even Churchill is still in decline in open businesses.
Churchill, to be blunt, is and always was a shithole. But hey, at least they have a proper supermarket now.
if it did there would be a bypass around Traralgon already.
Why would building a bypass have any correlation lol? A bypass would only benefit Sale, and it doesn't need it.
Sorry but I'll repeat again, combination of boomer talk and outright untruths. The Valley is doing great and it's only sad sacks who lost their "jobs for life" which they only obtained via a dad or uncle working at a power station, and couldn't/wouldn't retrain in something else, paid off their houses that grumble constantly to this day. The smart ones\good ones did extremely well after privatisation and keep working for GDF/Engie/AGL. The even smarter ones took their huge payouts and left the Valley for good.
@Typical16-bitEnjoyer: I was talking about Morwell go walk around that town, do it at night for me.
Traralgon is doing a lot better which the council claim is because they force traffick through the CBD hence the bypass. I wouldn't say local economic activity is enough to be 'booming' otherwise there wouldn't be such a justification by the council and a bypass would be built.
Also, IGA was a "proper supermarket" in Churchill. They also had a KFC at one stage but I guess all this "booming" caused them to shut down.
FYI the smart ones went interstate for work which is beside the whole point. Privatization killed the area and it has had to adapt, by your own admission; some towns did better than others.
@A-mak: Morwell was always a shithole too. Nice Courthouse now tho. Privatisation didn't cause crime to increase, weird ad hominem.
LCC don't have any say in a bypass. Even then, why would any city want a bypass built around its own city anyways?
IGA was a glorified servo. Try again.
Privatisation didn't kill anything, it led to a new generation of cashed up peeps and thus why the area is booming and property prices are booming now.
And instead of funding healthcare and social housing properly, the Libs decided to commit Hundreds of billions more debt over decades to buy American submarines. Is the LNP aligned with American rather than Australian interests? Interesting to note even mainstream media like ABC doesn't report this obvious big gap in future funding.
GPs asks veterans to pay for treatment, saying funding too low
https://www.abc.net.au/news/2023-02-15/act-gp-refuses-vetera…
Why are we wasting money on defense spending? No matter how much money we squander, the Chinese would crush us without breaking a sweat.
Instead of trying to provoke a war with China, we should instead form an alliance with them. America is a geriatric nation now, a sick, declining former superpower. Their military cares more about correct gender pronouns and persecuting conservatives than they do about projecting force. Forget about them.
Thats crazy talk.
We are not provoking any war with China. Look at their expansionist island building activities. They are trying to bully the Philippines, Vietnam and numerous other countries in the area. We should be very careful and prepare a good a defence as possible when such countries show such activities. We were unprepared when Japan did it in the 30s and that almost got us invaded.
And why would we align ourselves with China? Our society norms are totally different. Im not a huge fan of Labor or Liberal but i will take them over a dictatorship any day. At least in the US their leaders have a maximum time of 8 years at the top. unlike Xi Jinping who abolished limits in 2018 and is up to 10 years in power. Look at Putin. He is past 20 years and thats going great for Russia.
Yeah, like telling slaves not to rebel against slave owners, but instead try to find mutual benefits.
Good plan.
Ideology? Sure, that's what they claim.
But the real answer is obviously corruption.
Why do the Libs like selling public assets instead of buying more debt?
Because they are selling it to their 'mates' for kick backs who in turn give them an exit 'job' when they are done in office.
facts!
Ambassador to the USA - are you going to make any point whatsoever? There isn't a soul who is better suited to that position.
There isn't a soul who is better suited to that position.
🤣🤣🤣
Lol funny bugger..
What's Kevin Rudd doing this year?
What Sinodinos did before him and Hockey before that
Thus my point…
With a lot less creds for the job. Rudd is a good choice
So Kevin Rudd works in private industry then jv?
Last I read, teaming up with Malcolm Turnbull against Rupert Murdoch lol
Probably something more useful than Tony Abbott.
Perforated toilet paper is more useful than Tony Abbott
Why is almost every comment out of this account so controversial and ridiculous? It's like you're trying to be some under the bridge creature…
Why is almost every comment out of this account so controversial and ridiculous?
Do you think we should ban you?
This is the REASON WHY!
Yeah the ALP do the same thing with the Unions. Its not what you know its who you know.
Ah yeah, those cashed up unions…
Labor politicians often get board positions too. It's not like most of their policies aren't pro-business.
Before that I would like to know why NSW are in $11b in the red for the year, whilst getting $26b in GST.
Because they spent at least $42.6b in employee salaries, $5.4b in super for those employees. $3.6b on interest on previous debts (which is one reason why LNP dislike borrowing).
I would like to know why it is impossible or inconceivable for NSW to be in $11b in the red for the year, whilst getting $26b in GST.
While you're there, I would also like to know why grass is green, whilst the sun rises in the east.
its not just LNP in NSW - In Victoria State ALP sold the State revenue office [SRO] and Vic roads and we are still the most indebt state per capita
we also have given transurban a 100 year lease/monopoly over all our toll ways
At least the regulator in NSW is/has cracked down on the casino it seems Victoria has let Crown get away with billions of drug money lundering with a slap on the wrist
I think the theory is the less stuff the government has to manage the easier it is to pass on cost to the consumer and it is less for the government to manage - i personally dont agree with it i think certain services should not be allow to be sold off but there is no much we can do
The issue is both the federal and state governments Vic/NSW are bankrupt - but unlike the federal government the state government cannot raise capital by issuing bonds - state based debt is far worst then federal debt due to that difference. - people do need to learn the difference
The Transurban deal was to get them away from suing the government over the airport rail. Anytime someone even thought about building a train line to the airport Transurbans lawyers immediately got hard.
The government didn’t sell the SRO (that would be like selling the ATO) they leased the land titles office. Basically they sold the future revenue for a cash amount now. Still stupid and it was just a way to fund more election promises, but they at least maintained most of the control over it. Same with Vic roads, they sold the licensing but (I can’t wait for the massive data breach to come from that one)
The state that is well run is WA and that is probably becuz they got endless piles of cash due to mining every other state government as far as i can tell is a bit shambolic
You’d think it’s mining, but this year WA has $26k in revenue per working adult, Vic $23k and NSW $24k. It’s not hugely different, because WA doesn’t like to charge much in royalties (probably because of what happened the last time the National party leader went with a policy of more royalties, the mining bodies bankrolled his opponent)
You’d think it’s mining, but this year WA has $26k in revenue per working adult, Vic $23k and NSW $24k. It’s not hugely different, because WA doesn’t like to charge much in royalties (probably because of what happened the last time the National party leader went with a policy of more royalties, the mining bodies bankrolled his opponent)
interesting - i think most states are run poorly and i'd be in favour of abolishing the state government have having a local and federal government i never understood the need for a state government
Both NSW and VIC have made a Mozart from stamp duty during the housing boom yet are still bankrupt - Victoria has the highest duty charges in the country and i honestly couldnt tell you where the money has gone? and now property is slowing i reckon the state is stuffed
Both NSW and VIC have made a Mozart from stamp duty
I think you are Baching up the wrong tree.
@Trying2SaveABuck: I'd rather abolish local governments. Useless money sucking twats that are far more problem than worth. They should just collect the garbage and shut up.
If you think WA is well run I suggest you live there for a while, don't get sick while you are there…..
If you think WA is well run I suggest you live there for a while, don't get sick while you are there…..
thats fair i might be wrong i have only visited perth and the way the city is designed with the train running along the free way was incredibly smart
also seemed very clean bar a few rando drunks walking around during the day
but i have never lived there they are also not in huge crippling state debt like NSW and Vic ill give Dominic Perrottet a bit of slack he took over a state that was in a 'shit show' after Glady
@Trying2SaveABuck: If it wasn't for the miners, WA would have gone bankrupt a long, long time ago. Take that away and the state wouldn't function.
If it wasn't for the miners, WA would have gone bankrupt a long, long time ago. Take that away and the state wouldn't function.
pretty sure i said that…. i mean 'making a motza' not a Mozart that was my auto correct on phone lol
all for Mining i think it is Australias biggest trait and i cannot understand how anyone can be against it - our entire country would be bankrupt if it wasnt for mining
but i have never lived there they are also not in huge crippling state debt like NSW and Vic ill give Dominic Perrottet a bit of slack he took over a state that was in a 'shit show' after Glady
How is 20% debt to GSP in Victoria crippling? People can take out 95% loans to buy a house. States can be bailed out by the Federal money printer. A decade of federal LNP has taken federal government debt to 45% of GDP.
Separately, Victoria's net debt is forecast by the state's Treasury to rise from $116 billion this year to $166 billion in 2025-26
https://www.afr.com/policy/economy/victorian-incomes-lag-und…
i dont think you understand the difference between state and federal government
Federal government debt is not great but they can 'issue' bonds to raise capital these bonds can be done with the central banks
the state government can only repay debt via taxation or selling assets in which Victoria has no assets anymore to sell after essentially vic roads and SRO were sold off
state debt is far worse
NSW and Victoria are both swimming in debt compare that to QLD and WA who have almost no state debt
compare Vic to WA
McGowan said that the debt had been reduced for a third year in a row. “At the same time, we have reduced net debt for a third year in a row, down $4.3 billion to $29.2 billion in 2021-22, the largest ever reduction
https://www.themandarin.com.au/201284-wa-budget-in-6-billion….
essentially vic roads and SRO
Well that's not true, so I'll ignore the rest of your post.
Also you fail to recognise the failings of our former Lib government the past 3 years. Guess how much debt multiple certain states racked up during that period - no thanks to ScoMo and his mates?
@Trying2SaveABuck: Relax: Queensland has used the Wagner troops to build a concentration camp. Anybody spilling the truth will have a place to sweat it out!!!
Gotta come good on those political back handlers for your big donor mates…
Modern day Neo Liberal approach. In theory it’s less Issues for the government to fund and manage these infrastructure and other policies and initiatives but all it does is kick the can down the road to become a future problem.
I just want to know how I get in on the act….
Theory is private sector is more efficient (market will respond with supply and pay for it).
Fact is politicians sell to their mates who makes a lot of money out of it. Most of these are almost monopoly assets such as power lines, rail operations.
Theory is the money can be used to pay off debts or reinvested in infrastructure with better returns.
Real advisors are giving the correct advice around market economics. Unfortunately political advisors are just trying to buy votes.
Efficiency is a bit of a pipe dream, in economics what actually happens is they run it to be the most profitable which is not the same thing. Plus we’ve outsourced most of the government to suppliers already, selling doesn’t change things much in terms of competitive supply.
You’re spot on with monopoly assets, basically all that happens is the government writes terms and conditions to create more profit for the more corners they cut. Quality goes down the toilet every single time.
Theory is private sector is more efficient
That is the theory until 'profits' come into play…… No private sector company does anything without profits to keep shareholders happy.
That is why "theory" we haven't yet made it reality. Or people are just applying it to the wrong thing.
So the 'theory' that private sector is more efficient is totally wrong ;)
@JimmyF: Private sector is more efficient at extracting profits. How do you explain the long term returns of the stock market?
You only need to look at the NBN as a case study in how government run infrastructure works. Compare it to our world leading LTE/4G infrastructure which was 100% run by private industry and let me know how your theory stacks up.
Ideology. Didn’t stop the fed libs when in power accumulating a trillion dollars of debt.