10/03/2020 - 15:57

Labor winds-back privatisation

10/03/2020 - 15:57

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OPINION: The McGowan government has made a big call to put jobs at a major Perth hospital on the public payroll.

Mark McGowan’s decision will cost $20.9 million in the first year without creating a single new job. Photo: Gabriel Oliveira

OPINION: The McGowan government has made a big call to put jobs at a major Perth hospital on the public payroll.

What an extraordinary admission by Mark McGowan: that 650 privatised jobs at Fiona Stanley Hospital will be placed under direct public sector employment and cost taxpayers an additional $21 million in the first year and a further $8 million annually for the next nine years.

The premier’s justification for the move is the claim that relevant jobs should never have been outsourced to a private sector provider in a government-funded hospital in the first place.

Has there been a case to prove that the private service provider Serco has fallen down on the job and that patients have been getting second-rate treatment? Certainly not from recent anecdotal evidence, which has generally been favourable.

That is apart from the teething problems when the hospital was commissioned. And a consistent source of the complaints at that time was the United Workers Union, which would have much preferred its members to be employed in the public sector, where it has a greater sway in influencing a Labor government, than by a private company.

And which union is the major beneficiary of this decision? United Workers Union, of course, the union on which many Labor MPs, including senior ministers, rely for continued endorsement in their safe seats. Its secretary, Carolyn Smith, is state Labor president.

The move comes after three years of households being forced to tighten their belts to pay steep increases in power and water charges. These were blamed on the debt from the Barnett government years (2008-17). Now the first concession is to convert private sector jobs to the public sector, not to save taxpayers’ money but with an acknowledgment that it will cost them more.

What was the government thinking?

The decision sends a number of confused messages. The state’s government hospital system is a mix of private and public sector operations. The private involvement is linked with previous Liberal governments, which believed taxpayers would get better value for money without compromising patient safety.

Do Mr McGowan and Health Minister Roger Cook, with union encouragement, now intend to start returning other services privatised under the Liberals to the public sector? Where does this leave the new Midland Hospital, operated for the government by St John of God Health Care, for example?

There is also the question of productivity. The decision effectively concedes that it will cost millions of dollars more to get the same amount of work done, simply because hospital workers will have a different employer. No explanation, but presumably lower productivity (a tacit admission that the public sector is less efficient).

It’s a far cry from the emphasis on productivity under the leadership of successive Labor prime ministers, Bob Hawke and Paul Keating through the Council of Australian Governments. Thanks to their initiatives the states were handsomely financially rewarded if they improved the efficiency of their operations.

State-run enterprises have steadily been wound back over the years. For example the Burke Labor government disbanded the State Engineering Works, which made Australia II’s winged keel for Alan Bond’s successful America’s Cup challenge in 1983, in North Fremantle, and the Court coalition government axed the Midland Railway Workshops, which had trained thousands of tradesmen, in 1994.

The rationale was that these activities, established by the state for good reason at the time, were now better handled in the private sector.

Labor’s pre-election mantra in 2017 was ‘Jobs, Jobs, Jobs’. This latest decision, by the premier’s own admission, will cost $20.9 million in the first year alone and create not one new job. Given the uncertainty of the threatened health crisis thanks to COVID-19, the government would have been better advised to hold off in case the extra money was needed for a health emergency when the winter flu season hits.

The government’s announcement said: “The policy honours the WA Labor election commitment to return privatised services into public hands, where possible and economically beneficial to do so.”

“Economically beneficial?” It fails the first test. How can it be beneficial if it doesn’t create one extra job and actually costs more?

Western Australia’s economy isn’t on life support but parts, such as the labour-intensive retail sector, are close. Taxpayers want their money used wisely, not splashed on ideological frolics.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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