The first is to have a monopoly, preferably a regulated one, such as a public asset that has been privatised.
Sydney’s Kingsford Smith airport was flogged off by the government to a private operator who makes obscene profits, not just from the landing rights, but parking, retail concessions, and every other opportunity to gouge. What are your options… catch a train to Singapore?
The second is to be in a market where the person shelling out the money for your product is not the decision maker in the purchase.
The Australian publicly funded pharmaceutical benefits scheme is such an opportunity. Once on the list, the pharma companies sell to the doctors, persuade them to prescribe their magic to their patients, who pay a consistent subsidised cost, whatever the price of the drug to the public purse. Perhaps inconsistently, I am in favor of this scheme, despite the obvious rorting potential it delivers, just disturbed by the lack of governance and oversight. During the height of the Covid pandemic, champagne must have been popping in the boardrooms of Pfizer et al as the governments delivered a marketing nirvana.
I am always caught between amazed laughter and despair when I hear a politician whining in the lead-up to an election about the prices of some commodity, the ownership of which they have flogged off to private enterprise, who then proceeds to make an outrageous profit, because they can. When the buyer is a multinational, you often see that profit disappear, as corporate financial engineering kicks in, and the tax havens suddenly appear as key corporate players.
Just look at what has happened to power prices since the privatisation of the poles and wires, the toll costs of driving from the western suburbs to the cities east, both done in a strategic vacuum for short term political gain.
The reason given was to free up capital to apply against community priorities of education and health. This is a fine aspiration, unmatched by the outcomes.
No matter what words are used, what they have done is subsidise private profit from the public purse.
The Northern beaches hospital at French’s Forest is a prime example. The NSW state government poured 2 billion dollars into the hospital and surrounding infrastructure, in a so called partnership with Healthscope, then an ASX listed company, and all but closed the alternatives in the area, Mona Vale and Manly hospitals. Subsequently, Healthscope was acquired by Canadian group, Brookfield, that featured in the Panama and Paradise papers as protagonists in tax avoidance via trusts located in tax havens. Meanwhile, chaos reigns in the hospital and public health outcomes are compromised.
So much for the competition, community outcomes, and for the tax on the resulting profits.
What a great way to make a bob!
