WAFarmers CEO Trevor Whittington says privatisation of state government assets – if done correctly – could unlock funding to develop regional areas
By now, most farmers will have heard that the State Labor Government is “flying the kite” on taking back ownership of WA’s rail network.
For some, the idea of reviving a government-run rail system is a dream come true.
For others, especially those who remember the old Westrail, the idea brings back memories of bloated inefficiency, endless strikes, and bureaucratic mismanagement.
The odd thing about rural Western Australia’s attitude toward privatisation is how conflicted it remains.
There’s a solid section that retain a deep suspicion – if not outright hostility – towards government, yet a surprising number still cling to the idea that natural monopolies should remain state-owned.
“We need to ‘keep the family silver’,” they tell me, “so the profits flow back to the people,” not that there is much silver left with these families.
They have either sold it off long ago to invest in more farms or sold it off because they went broke waiting for the government to save their farm.
The problem with this thinking is that it assumes government ownership guarantees better service, lower prices, and long-term economic security.
Yet the long sad broken history of state-run monopolies suggests otherwise.
If state control is really the answer, why stop at buying back the railways? Let’s take back the airports, the banks, the ports, the power stations, the pipelines, not to mention the phone networks.
It was not until the 1990s and early 2000s, that the federal government managed to begin the process of selling off major assets, and in turn the state government followed suit.
The argument was simple: competition would deliver better services, lower prices, and remove the dead hand of government interference.
In most cases privatisation has been an outstanding success, for instance Qantas, CSL and the Commonwealth Bank would never have been as successful if they had remained government owned.
In other cases such as the airports, Westrail and Telstra, the failure to set a competitive regulatory model and the greed of the government of the day to maximise the sale price at the expense of future investment has seen their new corporate owners milk the asset for all its worth, while investing the minimum they can get away with.
Today, privatisation has undeniably improved efficiency, but it hasn’t always delivered competition or lower prices.
In many cases, we’ve simply swapped public monopolies for private ones and the only real difference is that the profits now go to shareholders instead of union-backed payrolls.
Still, at least the trains run on time, the airports function, and the gas keeps flowing – something that wasn’t always guaranteed when unions had the power to bring everything to a standstill with annual strikes.
Yet, despite the success of privatisation at the Commonwealth level of generating cash to help wipe out Australia’s debt and free up cash for future investment in roads and hospitals, the Western Australian government still clings to a few legacy assets – Western Power, Fremantle Port, and Water Corporation – collectively worth around $20 billion.
The anti-privatisation crowd argues that these should never be sold, lest WA be held to ransom by the corporates, but they seem to forget about being held to ransom by the unions.
The reason privatisation has sometimes failed isn’t because the private sector is greedy. It’s because governments are. Instead of structuring sales to maximise long-term investment and competition, state governments have treated privatisation like a fire sale – grabbing as much cash upfront as possible while failing to set the rules to ensure the assets are properly developed.
Imagine if WA had sold its state rail network for $1 instead of $585 million in 2000, but on the condition that the buyer was required to reinvest and upgrade the entire system to world-class standards. We wouldn’t be having this debate.
If Perth Airport had been sold for $1 instead of $643 million, with an ironclad requirement to build a third runway, we wouldn’t have a bottleneck at takeoff.
If the Dampier-to-Bunbury gas pipeline had been sold for $1 instead of a hefty price tag, but with a mandate to duplicate the line to ensure future capacity, we’d have avoided years of supply constraints.
And if Fremantle Port had been sold for $1, with a binding agreement to build a fully automated, multi-user deepwater port, WA would be the most efficient trade hub in the Southern Hemisphere.
Governments hold all the cards when they privatise assets, yet they continually play them badly. Instead of using their power to secure long-term benefits, they cave to short-term budget fixes – selling off assets for top dollar to patch up finances rather than structuring deals that ensure competition and reinvestment.
When the inevitable happens—when the rail network falls into disrepair, airport expansions stall, or port fees skyrocket—the very politicians who botched the sale in the first place turn around and blame the private sector.
State-run enterprises are just as ruthless at price gouging as private ones – only with bigger bureaucracies, more inefficiency, and even less accountability.
Meanwhile, out in the Wheatbelt, the demand for government investment in infrastructure is deafening.
Nobody wants to talk about where the money is actually going to come from. It’s certainly not coming from higher fees and charges – no one wants those.
It’s not coming from a land tax – because that’s political suicide. And it’s not coming from payroll tax – because everyone agrees that should be abolished, right alongside stamp duty.
So where exactly is this magic pot of infrastructure funding hiding?
Because unless someone is willing to make the hard call – whether that means selling off state assets or finding new revenue sources – all we’ll get is another decade of political lip service while regional WA keeps falling further behind.
Meanwhile, billions of dollars sit in state-owned utilities, money that could upgrade regional infrastructure.
So where is the money going to come from? The obvious answer is to sell off the remaining ‘family silver’ assets and redirect the money to where it’s needed.
State-owned utilities should, in theory, be reinvesting their profits into the very infrastructure rural WA needs. If they aren’t, what’s the point of keeping them?
Either they should be sold and the capital reinvested in regional WA, or they should be forced to put their bloated profits back into the network. There is no logical case for the government to sit on highly profitable monopolies while farmers watch another decade of underinvestment roll by.