Saturday, July 19, 2008

Privatize Centrelink

The great frontier for privatization is government administration. If governments want to provide better services for customers and receive value for money then the administration of government programs need to be in a competitive market.

The public generally forgets that state agencies such as Centrelink and Medicare are monopolies, they are state owned enterprises who basically administer databases. Theres absolutely no reason why their activities couldn't be done by the private sector. Companies often outsource activities such as superannuation and share registry administration, customer service call centres etc. The private sector already has the basic organizations in place, they could quickly organize to take over the work.

Governments would farm out their programs by competitive tender for say, three years. Targets would be set and the results monitored. Fees tied to performance.

Critics will say that unlike Centrelink private companies would be driven by profit. While Centrelink may not technically make a profit, in 2005/2006 it had a “operating result” of $11.2 million. As well there was return to government of $45.6 million and it was $217.5 million cash flow positive too. The private sector could certainly operate programs efficiently and still make a profit. probably at reduced cost to the government. The no profit argument is no different then what was said before the privatization of Telstra or Commonwealth Bank. Those evil profits allow companies to grow and invest providing revenues to governments through economic growth.

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Ralph Buttigieg
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