Budget will put Brumby's efforts to the test

A quarter of a century ago governments throughout the Western world realised they were no good at running businesses.

Government businesses tended to be hostage to narrow employee interests, resulting in overmanning and high costs to taxpayers and consumers.  Placing these businesses under proper management made huge differences.

A key feature in eliminating that waste was privatisation as with Qantas, Telstra, banks, gambling, and energy supply.  An example of the benefits is seen with the private companies that replaced Victoria's Gas & Fuel and the State Electricity Commission.  Energy is now more reliably delivered with only a quarter of the labour force.

Having sold their commercial business arms, few governments now wish to turn back the clock.  This remains the case even when they are copping adverse publicity for a privatised activity's operations, as with Melbourne's trains.

Governments know they cannot improve on a private operator, which in place at least allows them to duck some brickbats that come their way.

But governments still want to pull the business strings.  And, unfortunately, some politicians see an absence of direct budgetary accountability as providing scope for greater freedom of action.

Nowhere is this more obvious than in telecommunications.  Having sold Telstra, the Commonwealth installed a tough regulatory regime to force down prices.  And the Rudd Government now wants to conscript Telstra on the cheap into its broadband paradise plan.

Similarly with energy, the Commonwealth is seeking to load the costs of its greenhouse policies on to businesses to deflect criticism of itself.

The Victorian Government has form in this direction, having its own renewable energy carbon emission program.  It maintains this actually creates jobs despite volumes of evidence proving the contrary.

Moreover, in a triumph of hope over experience, Spring St intends to implement policies based on Australian Conservation Foundation "research" that claims 500,000 green-collar jobs can be created by 2030.  The massive subsidies required would displace real jobs and, in the process, leave us all considerably poorer.

In similar attempts to mollify the green activists, the Victorian Government is persisting with its desalination proposal.  That will cost upwards of $3 billion to supply water at six times what it would cost from a new dam using the eastern ranges' abundantly available supplies.

However, the Brumby Government deserves some credit in tackling over-regulation.  It has been more successful than other state governments in allowing housing developments on rural land.  The result is lower house costs.

The Government also has introduced the regulation watchdog, the Victorian Competition and Efficiency Commission, which has slowed the growth of regulations.  However, Spring St has removed little of the excessive regulation that the VCEC identifies.

Premier John Brumby has recognised the necessity for belt-tightening.  It has rarely been timelier to implement measures to protect jobs by lowering costs.  Many such policy changes are available.

For example, the Victorian community would receive a handsome dividend from replacing the desalination White Elephant with a new dam.  Other benefits would follow from further relaxing land use restraints and from an intensified assault on regulations.

Leadership is urgently needed and the state Budget on May 5 will measure the Premier's credibility.

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