ANALYSIS: Labor’s plan to buy back the rail freight network adds to multiple moves across the water, roads, health and prison industries to reverse the privatisation of assets and services.
ANALYSIS: Labor’s plan to buy back the South West rail freight network adds to multiple moves across the water, roads, health and prison industries to reverse the privatisation of assets and services.
The changes instituted by Labor since it won power eight years ago collectively represent a significant shift in the balance between private and public sector service provision.
Contracts worth billions of dollars that had been delivered by the likes of Fulton Hogan, Downer, Programmed, Serco and Macmahon are now delivered by government employees.
It has not entirely been one-way traffic, with Labor having selective support for privatisation, as discussed below, but the trend has been clear.
The shift away from privatised services started in 2019, when the Water Corporation announced that maintenance and operations delivered by Programmed, Suez Water and Broadspectrum would be brought in-house.
That resulted in about 450 jobs shifting into the public sector.
Then Water Minister Dave Kelly claimed both decisions would save money but neither he, nor the Water Corporation, released details.
According to Suez’s website, it had exceeded the contractual savings requirement each financial year.
Similar questions arose in 2022 when transport minister Rita Saffioti announced that road maintenance services would also shift in-house.
The previous coalition government had awarded seven multi-year contracts to private companies to deliver these services.
The reversal saw Main Roads WA take on about 550 workers to deliver the work.
The government has boasted that many of these workers would have better pay and conditions than they previously received.
It also spent $48 million on new or expanded offices and maintenance depots across the state.
Despite all that, it claimed the shift would save $25 million a year by cutting out the margins from the private contracts.
The Chamber of Commerce and Industry of WA was unconvinced, calling at the time for the government to release the modelling.
“It’s otherwise unclear how the decision can arrive at a $25 million saving, when labour and training costs are higher,” CCI chief Chris Rodwell said.
Another major shift was in the health sector.
Serco Australia was contracted to provide a wide range of services when Fiona Stanley Hospital was opened by the Barnett government.
In 2020, then premier Mark McGowan said three major contracts held by Serco would be halted, resulting in 650 jobs moving back to the public sector at a cost of $93 million over 10 years.
Mr McGowan said the hospital services should always have been delivered by public sector employees.
“Having these services and jobs run in-house is the right thing to do, we never believed they should have been privatised,” he said.
One of the beneficiaries of Labor’s policy shift has been the union movement, which traditionally has much stronger penetration among public sector employees compared to private contractors.
Serco did not lose all its contracts at the hospital; it retained 21 smaller contracts, employing about 350 people.
It has subsequently won other outsourced contracts for government agencies, as have other private operators.
Nonetheless, there has been a notable shift away from outsources services to the private sector.
In tandem with this shift has been a sometimes-confused debate over privatisation of government assets.
The 1990s and early 2000s was a busy time for privatisation in WA, with SGIO, Bankwest, the Dampier Bunbury natural gas pipeline, AlintaGas and Westrail Freight among the main assets to be sold.
Around the same time, the federal government privatised Perth Airport and Jandakot Airport.
The Barnett government had been looking to sell further assets, including the Utah Point shipping berth at Port Hedland, the Kwinana bulk terminal and, most notably, a half share in Western Power.
Labor made great political capital by opposing the Western Power sale.
Despite that, it has subsequently privatised several assets, including Landgate’s land titles service for $1.4 billion, and tried to sell the TAB before giving up.
Labor also allowed Synergy to effectively privatise its major wind farms by selling majority ownership to a company named Bright Energy Investments.
Labor has also partnered with the private sector to rebuild what had been government enterprises.
Most notably, it struck a deal with global engineering company Alstom to build and operate a railcar assembly operation at Bellevue.
That has brought back manufacturing jobs to a region that was adversely affected when the Court government shut down the Midland Railway Workshops in 1994.
In nearly all these deals, there has been remarkable little transparency.
Are taxpayers better off?
Have service standards improved?
For the most part, we have to rely on government assurances.
The same applies to the planned buy-back of the rail freight network, with Labor saying today it will only do a deal with current operator Arc Infrastructure “if it is economically and financially responsible to do so”.
Here’s hoping.
