Privatisation makes ‘no sense’—P.S.A.

Press, 12 July 1988, Page 5

Privatisation makes ‘no sense’—P.S.A.

PA Wellington It makes no sense for the Government to sell financially viable businesses in order to retire its debt, according to the Public Service Association.

In a paper on the proposed privatisation of the Health Computing Service, the association says the Government is arguing for short-term, one-off immediate capital gains and saying good-bye to any medium-term strategy of retiring the debt.

Even if the Government sells the service for $3O million this would pay less than half a per cent of the Government’s debt, the paper says.

“Once the organisation is sold, any future financial input into the public economy is written off.” Under a privatised regime, the State, through the health services, would have to buy the same service back from a privately owned and controlled health computing service at commercial rates, the association says. “These commercial rates would obviously include a private profit margin. “The monetarist tendency in the Government continues to argue that privatisation would ensure that the discipline of competition would promote efficiency and competitive

price structures.

“But the Government intends to make this venture profitable by selling it at below replacement value and to help them in the restructuring process.”

The sale of the service would cause the State to become dependent on a private monopoly provision of computing services, the association says. “They would become locked into this organisation and would have to accept its monopoly prices.”

It is time the Government “came clean” and admitted its privatisation programme so the issue can be debated publicly.