The ACT Treasurer, Ted Quinlan, has said the ACT Government would not object to Totalcare withdrawing from its 50 per cent stake in the Williamsdale Quarry. He said that any ACT Government enterprise that could not provide some return or a wider benefit to the community would need to justify itself. He said that he would review all government enterprises.
That is a sensible approach for a new Government, though his statement of principle needs some refinement. He might also review all substantial subsidies that the Government gives to some enterprises.
The quarry is a classic example of a business the Government should not be in. There were other suppliers of stone available. There was no need for Government intervention to ensure the supply of a necessity. Even if the quarry made a profit, there would be little to justify government involvement. It should put its money where business cannot or will not put it.
Mr Quinlan has got half the equation right. If an enterprise is not providing a monetary return, it would need to show that it was providing some wider benefit to the community or close down. In fact, every government enterprise needs to show a wider community benefit or be sold or closed. Merely making a profit does not justify continued government involvement if the investment would be better placed elsewhere – not in money terms but in overall well-being of the community. Government could get out of some activities which would be taken up by the private sector so the community would not be missing out and then use the money to provide something the private sector cannot do – to the additional benefit of the community.
Obviously, the Government would need to engage in this process with some care. Snap decisions to sell or close could cause a great deal of disruption to those working in the enterprise. On the other hand, a slow closing process can lead to unnecessary commercial losses as staff and customers run at the prospect of closure.
Sometimes Governments should run enterprises that make losses, particularly in health, education and care for the very young and the aged. But the benefit has to be commensurate with the cost.
A good example of how these principles might be tested is with the International Hotel School. It was conceived by the Labor Government, opened in 1995 and later corporatised but still under Government ownership by the Liberal Government and will now presumably be one of the enterprises to come under Mr Quinlan’s review. It has a fine aim to educate young people. But one must question the cost. The cost is approaching $50 million since the school opened and there is no prospect that it will ever break even. The school will have to justify whether the spending of that money is worthwhile for the education it gives and the flow-on effect to the ACT industry, or whether it would be better to pack the training off in a different form to one of the educational institutions and convert the space at the Kurrajong Hotel to a commercial venture.
Although not government enterprises as such, the Government’s underwriting of other activities also deserve Mr Quinlan’s eye, by balancing the educational, cultural and economic worth against the money put in. The V8 race comes to mind.
The arrival of a new Government is a good time for such a review, irrespective of positions Labor might have held in Opposition or when previously in Government.
Judging by the several new appropriations Labor has sought since winning office, some fiscal rectitude is in order.