In the ongoing battle against inflation, we often overlook the elephant in the room: privatisation. Australia's persistent inflation problem, a painful scourge for its citizens, can be traced back to the very roots of its economic policies. The author, Alison Pennington, a chief economist at the McKell Institute, argues that the root cause of inflation lies in the hands of privatisation, a concept that has been a contentious topic in Australian politics for decades. Despite passionate debates, the public's aversion to privatisation remains unwavering, and it's high time we confront the elephant in the room.
The article delves into the rising costs of essential services, such as utilities, healthcare, and education, which have been privatised or operate alongside struggling public options. The author highlights how these privatised services, once public goods, have become a burden on household budgets. The blame, however, extends beyond the privatised sector. The author argues that the government's role in protecting its citizens from profiteering is crucial, and this is where the real solution lies.
One of the key insights is the need for price controls. Australia has a history of legally capping essential prices to control inflation, as seen in the Prices and Incomes Accord. By heavily taxing sudden unearned profit spikes, a windfall profits tax can be implemented to reduce inflation. Additionally, wealth taxes can curb excess cash chasing limited resources like housing. However, the author emphasizes that the long-term structural solution lies in public provision.
The author proposes a comprehensive plan to repair the 'leaks' in the universal public education and Medicare systems. This includes adding childcare to the public education stack and dissolving markets for fee-charging schools, GPs, dentists, and specialists. By weaning privatised parallel systems off the public teat, the government can regain control over essential services. The author also suggests establishing a new Commonwealth entity to build, own, and deliver cheap renewable energy, prioritizing public ownership and control in the energy sector.
The article concludes by predicting that these measures would be popular, despite opposition from the business sector. The author argues that the RBA's 'sticky' domestic inflation is a legacy of a failed neoliberal project of outsourcing and privatisation. With geopolitical inflation risks on the horizon, the government must step up and reclaim the field, ensuring that essential services are protected and controlled by the people they serve. In my opinion, this article provides a compelling argument for a shift in economic policies, one that prioritizes public provision and price controls to combat inflation and protect the interests of working people.
