LaTrobe Hospital Fiasco Gives Privatisation Advocates a Black Eye

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The Kennett government privatised everything in sight, starved public hospitals of funds but gave millions to the Grand Prix. Photo by Peter Murray.

Once a small junction on the main Gippsland rail line, Moe together with neighbours Yallourn and Morwell, grew large because of the State Electricity Commission’s (SEC) huge open-cut coal mines and power stations. The expanding population needed medical facilities and throughout the 1960s, the people of the LaTrobe Valley towns raised money for a hospital. The thousands of SEC employees were joined by workers at the Maryvale paper mill and small business people in levying themselves to fund the project. In 1971, the LaTrobe Valley Community Hospital was opened, and the communities celebrated.

By 1996, the Valley was at the centre of one of the most reckless privatisation campaigns ever attempted. The vast coalfields and the associated generation plants were in the throes of being sold to a variety of transnational corporations, and purges of the workforce had begun. Rail services were curtailed and schools closed, adding to the job losses. Small and medium businesses failed. All this to satisfy the former Kennett Government’s neoliberal fantasies of a state “fully integrated” into the global capitalist economy.

Despite its status as an irreplaceable hub in the national power grid, the Valley was being bled to death. And in October 1996, the Kennett Government added insult to injury, announcing the closure of Moe’s prized hospital in favour of a privatised facility 20 kilometres away. The work of volunteers, the chook raffles and fundraising nights which bound the community and the hospital together were ignored.

In July 1998, the shiny, sterile replacement opened, under the management of Australian Hospital Care Limited (AHC). Just over two years later, the company abandoned its contract and the LaTrobe Regional Hospital reverted to state ownership. The reason? There are no profits in providing public healthcare. Not in Victoria, not anywhere in the world. The LaTrobe Regional Hospital was the first attempt to privatise a public hospital. It was a costly experiment. AHC has negotiated with the Bracks Government to end its 20-year contract, agreeing to drop legal action — it had sued the government for $10 million, claiming funding shortfalls and other contractual breaches.  The company paid around $1 million, and the government will purchase the hospital buildings for less than half their value. The people of Moe, however, will still be without the community hospital that once stood on Bowman’s Hill.

Snake oil remedy. Privatisation — of everything from public transport, electricity, gas, water, hospitals, prisons and fire and ambulance services — was hailed by the Kennett Government as the solution to the State’s economic woes. Massive advertising campaigns loudly proclaimed that privatised services would be better services. Competition would ensure that essential services would be delivered to the public more effectively and more efficiently. And what’s more, sale of the State’s public assets would, it was claimed, allow the government to substantially reduce its (allegedly) high debt levels.

But privatised services haven’t proved to be better services. Privatisation of the ambulance dispatch service has led to much longer ambulance response times — people have died as a result. We’re now paying more for electricity, water and gas than we’ve ever paid before. Privatised prisons have been plagued with problems from high levels of drug use and deaths in custody to staff protesting inadequate resource levels and working conditions.

The veil of secrecy which has surrounded government contracts has raised considerable community concern. Details of contracts were extremely difficult, if not impossible, to obtain as the Kennett Government argued that “commercial confidentiality” was required to protect sensitive commercial information. But a review by the new Bracks Government found that it was not the private sector, but the Kennett Government which had insisted on the contracts being kept secret.

So, why the secrecy? Privatised services are neither cheaper nor more effective for taxpayers and users.

Get out of jail free. Last October, the Bracks Government resumed control of the Metropolitan Women’s Correctional Centre at Deer Park. The prison had been operated by the Corrections Corporation of Australia (CCA), the same outfit which runs the immigration prisons such as Woomera. CCA threatened to sue the Victorian Government over the termination of its 20-year contract after just four years. The company believed it had been victimised and that “…there [was] no reason for the government to claim step-in rights. There is no emergency and the prison is operating efficiently and peacefully.”

Yet the government had issued three “default notices” to CCA in May and July 2000, covering nine areas where the private operator was in breach of its contractual obligations.  When CCA’s contract was cancelled, it remained in breach in five areas — inadequate staffing levels, lack of adequate security measures, failure to control illicit drug use, to manage suicide prevention and excessive lock-downs, where prisoners are confined to their cells. The penalty for this delinquent behaviour? Despite being in breach, CCA was paid $20 million to buy out the contract. Maybe crime does pay!

People before Profit. Privatisation has never been popular with the community. The majority of people support public ownership and government provision of efficient infrastructure and services.  When ordinary people use the word “efficiency,” we mean: uninterrupted power, water and gas supplies, trains that run on time, uncrowded classrooms and accessible healthcare, all provided at the lowest possible cost.

In neoliberal-speak, by contrast, “efficiency” means fewer workers providing cut-down services at exorbitant prices. The immediate results of this are greater unemployment and the destruction of communities. Privatisation is not about providing better, cheaper services, but of siphoning off more of our money into the pockets of shareholders and  obscenely overpaid CEOs. It’s part of a more general drive to cut wages and working conditions, jobs and government spending. It’s about the working people of this country paying for the rich to get richer.

Returning privatised services to public ownership is a step in the right direction. But inefficiencies — private and government — stem from the fact that under the present system, all economic activity is tied to profit. What’s missing from the equation is the ability of the community to determine where services are placed and how they operate. Workers and users of services are best placed to make those decisions, which would create jobs and rebuild communities torn apart by economic irrationalism. Stop privatisation! Public control of public services!

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