• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Privatisation.Privatisation is the full or partial transfer of ownership of public assets to the private sector. This commonly involves complex contractual structures to be put in place

Extracts from this document...


Autumn Privatisation a) Privatisation is the full or partial transfer of ownership of public assets to the private sector. This commonly involves complex contractual structures to be put in place, and the industries concerned are usually closely regulated. Privatisation does not cover activities such as contracting out, leasing and private financing of infrastructure projects. b) Before the 1980'3 there were few privatization programs in place. The earliest main one was in the UK in the early 1980's. After this many other countries followed in their lead. According to the OECD (Organisation for Economic Co-operation and Development), global privatisations totaled about US$30 billion in 1990 and reached nearly US$100 billion in 1998. Since then privatization has been dropping steadily, two of the reasons being, firstly the continuing decline in equity markets and secondly the deterioration of economic performance. c) The advantages of privatization are as follows: � Due to the profit motive, it is said that privately owned firms are usually more cost efficient than public ones. � The public sector is considered to lack flexibility to respond quickly and efficiently, to use new technologies and produce new products. ...read more.


� Privatisation can put at risk the equitable and sustainable provision of services where rigorous regulation cannot be imposed and enforced. � The public may have less say about the direction of the company if public assets are transferred to private owners � May lead to loss of employment if owners of private company decide it is inefficient. As you can see there many advantages and disadvantages, I think that privatisation can be a good thing, but some essential services are better left in the public sector as they are not profitable as a private firm and would not provide the service the way the government does. d) There has been an increasing amount of privatization in Australia as the 90's have progressed. In dollar terms, Australia had the second largest amount of privatisations in the world and raised over $95 billion from sales. Post-sale profits have been approximately $48 billion to shareholders. Privatisation has occurred in three main sectors - financial services, electricity and gas, and transport and communication. Governments have sold assets both by offering equity to the public and through trade sales. ...read more.


For many other GBE's, privatization came after they passed through a phase of corporatisation, where they were maintained by public ownership, but were required to achieve certain commercial goals, pay tax, borrow funds without a government guarantee and have any regulatory advantages removed. One of the major privatisations in the 90's was the half sale of Telstra telecommunications for $30 billion during 1997 and 1999. The high level of activity in the late 1990's that saw Australia become one of the world's most prominent source of privatisations is now over. Now Australia is Just consolidating. Privatisation activity on a large scale is unlikely to start until there is a move either to complete the Telstra privatisation or to sell the NSW power system (probably worth over $20 billion). Although debt reduction has often been used politically as the reason for privatisation, the fact is that the assets in government hands are never likely to perform on a sustainable basis as well as in private hands. Government just has too many conflicting objectives to manage businesses successfully. Aside from that it is true to say that privatisation is successful in reducing government budgets and debt. The following is a table showing all major privatizations in Australia in the 90's, both federal and state. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Markets & Managing the Economy section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Markets & Managing the Economy essays

  1. Discuss whether the privatisation of British Rail has been successful. Evaluate whether the new ...

    Moreover, the LRMC curve lies below it, indicating that economies of scale continue to be gained. The dilemma facing natural monopolies is that cannot survive as profit maximisers while producing at the social optimum (PcQ2) on the diagram. Consequently, subsidy is required in operate at this point.

  2. To what extent do you consider monopolies to be in the public interest?

    The firms themselves, however, tend to survive much longer, largely as a result of great market share, large production capacity, wealth and power that they accumulated during their period as a monopolist. Just as there are very strong incentives to create and maintain monopolies, strong forces exist to weaken and destroy monopolies.

  1. What are the reasons for governments to own business and assets? Why has ...

    The company has to spend a lot for the construction and maintenance of transmission towers, poles and power lines. Once it is in operation, it becomes continually cheaper to add extra consumers. It would be difficult for others to complete in the same area as the set up of another

  2. Who has benefited most from the takeover of Liverpool football club

    Tom Hicks - Age 61 - Estimated worth: �500m The son of a Texas radio station owner, Hicks went into finance specifically private equity and made fortunes for his investors and himself with takeovers of soft drinks companies such as Dr.

  1. The Rail Industry.

    are 26 individual companies that took over the running of lines from British Rail. Examples include Virgin, GNER and ScotRail. National Rail Private The Association of Train Operating Companies (ATOC) is responsible for ticketing (buying a single ticket that operates for several lines), issuing railcards and running the national rail inquiries phone line.

  2. How successful has privatisation been?

    Finally, if these more efficient privatised industries began to record a profit, the government would tax these profits, thereby helping to keep the PSNCR down. Is this an argument for privatisation or an end in itself? It is certainly a nice idea that more members of the general public own

  1. Did the privatisation of British Rail lead to an efficient outcome?

    not entirely due to nationalised but the fact that cars have become more affordable since 1960s, therefore more people preferred used road transport instead of rail transport, resulting in decreasing number of passengers of nationalised British Rail. After selling British Rail to private shareholders, operating companies have legal duty to maximise their profits for shareholders, rather than put passengers first.

  2. Technological Change and Markets & The Case For Public Ownership of Utility Companies.

    SMS and voice services to other firms such as Tesco and GiffGaff which run on the O2 network. This may benefit consumers through lower prices. This therefore leads to the structure of the market for mobile phone operators to move from a monopoly to one that is more in the form of an oligopolistic market structure.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work