The final bonus for former Qantas chief executive Alan Joyce of shares worth $3.8 million was made public last week in the company’s annual report. It was just another example of incidents that should raise questions about the whole 40-year history of privatisation in Australia.
The aim of sweeping away bloated, inefficient, unaccountable, publicly owned organisations to be replaced by the discipline of the market to the benefit of customers seemed laudable at the time.
But the promotion of the benefits of privatisations eclipsed the exposure of the detriments. The benefits were mostly short-term – to fix the Budget and to get constituents off politicians’ backs when the service provider did not provide service – the detriments were more long-term.
Rod Sims, who was chair of the Australian Competition and Consumer Commission for 11 years, was once an almost unqualified supporter of privatisation, but came to the view that there was no point in swapping a poorly performing public monopoly with an exploitative private one.
This is what happened. The fruits of privatisation did not pass to consumers and certainly not to employees, but to shareholders and senior managers, as Joyce’s pay-out attests. In 2018 Joyce was paid $23.9 million.
The Qantas privatisation was an especially dud deal for taxpayers. The Qantas public float (of 75 per cent of its shares) in 1995 netted $1.4 billion. It’s market capitalisation now is $18 billion (after paying shareholders billions more in dividends and executives millions more). Last year, it made $2.4 billion in after-tax profit – which would have gone to the Budget bottom line if it had remained in public hands.
Clearly Qantas was sold off too cheaply and if kept would have been a great earner for taxpayers.
The pursuit of profit over service and employee well-being is best exemplified by findings that Qantas sold dubious tickets on ghost flights and sacked 1800 workers unlawfully.
In short, after privatisation, morality and legally went out the window, setting a poor example for business generally.
Then we have the Commonwealth Bank, which was privatised around the same time.
Set up as the people’s bank in 1911, it was sold in three tranches for $9 billion. Its market capitalisation now is $281 billion. Its 2024-25 profit was $10.25 billion. Again, it was flogged off far too cheaply and if kept would have been a great earner for the taxpayer, even allowing for inflation.
Again, the pursuit of profit resulted in morality and legality going out the window.
The Banking Royal Commission found that the Commonwealth Bank charged fees for dead clients; duped people into buying unsuitable insurance profits; gave bad financial advice that profited the bank at the cost clients; and so on.
Unprivatised, it could have set an example to other banks which were found guilty of similar misconduct. Instead, it joined the wolverine pack.
Later privatisations continued to dud taxpayers, but not so badly. Medibank Private, sold for $5.6 billion, is now valued at $14 billion. Telstra was sold for $30 billion. Its market capitalisation is now worth $55 billion.
The Telstra experience shows that the public does not have to be completely ripped off. There has been more regulation and competition in telecommunications than banking or airlines and the results have been better for consumers, if not by very much.
Only with regulation and its active enforcement and measures to promote competition can privatisation give consumers anything near a fair go. Otherwise, upper management and big shareholders get all the sauce while wandering in and out of the Qantas Chairman’s Lounge chewing the ears of any politician who might give serious consideration to allowing more airlines into the market or building a Very Fast Train.
With utilities and telecommunications, service obligations only came as an afterthought to privatisations.
The real lesson here is that Australia is very poor at learning real lessons.
Governments and policy-makers bumbled from one privatisation to the other while consumers and employees were constantly let down. A few ad-hoc inquiries were made into some elements of some privatisations, usually by parliamentary committees, but there has been no general inquiry.
Given the Hawke-Keating Labor Governments kick-started key privatisations and the Coalition’s default position is “private good, public bad”, there is little impetus for reflection. Indeed, in 2016, the Turnbull Government asked the Productivity Commission to inquire into how the private sector could be used to make the non-profit sector more efficient.
Blunder on.
Perhaps the main reason for no inquiry into privatisation is that there has been no public pressure brought on by media exposure. The slowly evolving consequences of a broad policy across a range of industries and activities and how to fix them are of far less media interest than of malfeasance restricted to specific organisations or narrow sectors.
This is why the Banking Royal Commission got off the ground – endless cases in the media of lost life savings and of little people being done over. But that inquiry did not address the issue of privatisation.
It is not a matter of presuming that all privatisation is bad, but of inquiring into what was worthwhile and what could have been done better and what processes can be put into place to prevent repetition – to move from the ideological to the evidence-based.
It is not just privatisation but policy-making and public decision-making generally.
There are high stakes. For example, Australia has not had an inquiry into how and why we entered the Iraq War. Without that inquiry, its lessons, and corrective measures, we could sleep-walk into another costly, failed US-led conflict – a concern heightened by Donald Trump’s return to the White House and Prime Minister Anthony Albanese’s recent “warm and constructive”telephone conversation with him.
Regular inquiries into what we do and why we do them should not be blame-casting witch-hunts, but a process into making people’s lives better.
Crispin Hull
This article first appeared in The Canberra Times and other Australian media on 9 September 2025.
Basically, we are fkd.
Privatisation did present some advantages a the time. In QANTAS’ case it was initially a sound move.
I worked for QF from 1965 to 1990, having joined as a junior trainee and leaving as a Flight Operations Instructor. The company was wholly international but, from the late 1980s, the worldwide aviation industry was changing as countries deregulated their airlines. What this meant was most of the legacy international airlines, such as QF, sought a domestic operator with which to merge so they could offer seamless connections. In our case it was Australian Airlines (formerly TAA). Those that didn’t merge largely went to the wall: Pan American and Trans World Airways – both venerable US carriers – failed as they could not secure a domestic partner.
The QF/AA merger happened in 1992.
At the same time QF, under Government ownership, was grossly under-capitalised and the Commonwealth didn’t want to stump up more cash to support QF (rather like the withdrawal of subsidies to car manufacturing in 2017). So QF was privatised for those valid reasons
As time went on Jetstar was established which has been a success.
Trouble was, of course, the privatisation characteristic ills, as Crispin has pointed out, arose through greed and mismanagement as exemplified by QF management during and post COVID.
Alan Joyce claimed QF was within a fortnight of bankruptcy at the start of COVID as the airline shut down. He then sacked the baggage loaders, among others.
Those people were long term QF employees and were fiercely loyal to the Company. It was a smack in the face to them – they could have been kept on in a standby basis (as the pilots were) instead of engaging unskilled labour hire.
Joyce (and his board) destroyed QF’s proud heritage.
I was proud to work for the Company for 26 years and was horrified what Joyce did to those people (and the hapless customers who had to negotiate the labyrinthine QF call centres, waiting for hours).
Private investment requires a short payback period and ongoing excess revenue over expenses i.e. profit. Projects with a long payback period and services with net outgoings e.g. telecommunications, public transport, health, education need to be done by government. The Universal Service Obligation that John Howard was obliged to impose on Telstra to protect rural customers applies only to landlines and public phone boxes, mobile phones did not exist at the time. Telstra can and does downgrade rural mobile services when its commercial interests change.
Another appalling example is CSL, floated at a market cap of about $312m. The current market cap is about $101b , an increase of over 320 fold. Had CSL instead been placed in a sovereign wealth fund and managed professionally under contract, that wealth would have accumulated to the benefit of all. I wish I didn’t keep being reminded of Donald Horne’s assessment of our politicians.
I agree wholeheartedly with your conclusions but am flummoxed by the use of numbers. First, one can’t compare monetary values over time without adjusting for proce movements i.e. $1.4 B in 1994-5 with $18 B 30 years later. Second, one can’t claim that profits of $2.4B privatised would have been the same if in public hands. Poor handling of evidence feeds into the mis/disinformation crisis that is bedevilling our democracies.
Furthermore, because Finance is not the same as Economics, one needs to be more careful in using a firm’s financial data to make a broad economic argument. I know this is pedantry, but in these times, those seeking to inform must be very tight in logic.