Friday, June 5, 2009

Selling The Goose That Lays The Golden Eggs

EDITORIAL FRIDAY 05.06.09.
Forget About the opposition, the New South Wales government now has to get privatization plans past its own members. In what I snow a well established pattern the increasingly desperate leaders of the government are seeking to patch up the state’s finances by selling things off, only to be thwarted by a combination of their union colleagues and dissenters from within government ranks. First it was the disastrous attempt to privatise electricity which saw the demise of Morris Iemma and Michael Costa’s political careers, and which left the government in tatters. Then there is the ongoing conflict over plans to privatise some prisons, with one jail still subject to ongoing dispute, and now the plan to sell off New South Wales Lotteries is running into similar opposition from within.

While the business argument to sell electricity always had a legitimate foundation in terms of how the industry is managed, the argument in favour of privatizing prisons is purely based on cost cutting and the plan to sell the Lotteries office is pure fire sale. It’s all about plugging holes in the budget by selling assets and trying to find some sort of justification so that the people of New South Wales might be convinced that they are not being ripped off. Justice is a function of the state and fro that reason should not be privatized at all. But in the case of the lotteries office it just plain doesn’t make sense.

From a business point of view, it would be quite literally selling the goose that lays the golden egg. The government enjoys good solid income from the lotteries office, and every cent of it goes into delivering government services. Putting aside the question of whether the government is capable of spending our money wisely, at least it is contributing to the revenue which pays for our hospitals roads and schools. If it is sold to private enterprise, the new owner will pocket the profit, leaving only taxes and fees to flow back to the government. How can that possibly deliver a better outcome for taxpayers?

Equally, there is no benefit from a moral and ethical point of view either. At present, the decision to purchase a lottery ticket or a scratchy can be viewed as a voluntary tax which not only contributes to government services bit also carries the added bonus of giving the purchase the slim chance to win a windfall. Conversely, a private operator will only return to the community whatever is required by law in the form of taxes, while seeking to entice players to spend more on their products whether it is responsible or not. We already have enough of a social problem with pokies, casinos, bookies and so on. While it is the right of the individual to choose to gamble if he wishes, surely we already have opportunities to do so, and enough social fallout as it is.

Further, the concerns raised by Labor backbenchers such as Paul Gibson from Blacktown that a private operator might take the lottery and scratchies business out of newsagencies are also serious. Such an outcome could decimate thousands of small businesses, and all for no particular benefit to the community. It is clear that the motivation behind the plan has nothing to do with what’s in the best interests of the community, and everything to do with a short term cash grab which can only leave the state poorer.

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