When I recently learned of the push for Australia’s superannuation industry to invest in American infrastructure, alarm bells rang. Neoliberalism is still very much in economical favour so what was this really all about? When I read articles about it from Australia a little closer, I realised that they were missing the meat of the story, all that I was reading was the bare bones.
Firstly there is no $US1.5 trillion infrastructure plan as such in the 2019 budget. The Trump administration’s infrastructure plan is basically a finance deal that includes deregulation, and the privatisation of America’s state and local government assets. $US200bn is all that the American government is willing to spend including $US100bn that has been allocated to an Incentives Program. These figures however, do not include $US178bn worth of cuts to be made in the state and local government’s infrastructure budgets. They pretty much cancel each other out. The deep cuts in funding, and the need to fix their infrastructure will leave many of these government’s no choice but to look at private funding and selling off its assets.
No matter where the funding comes from, privatisation requires taking over a government function at a lower cost than the government can provide it, and to make a profit, or it wouldn’t be worth its while.
America has been undergoing privatisation since the Reagan administration through its neoliberal policies. These policies enabled private to take over energy infrastructure and utilities, but not roads, rails, ports and airports, they have mainly remained as state and local government assets. Privatisation though is not as popular as it once was due to American’s seeing and living with the consequences of privatisation; they know how it affects their lives, wallets, and their communities. In Chicago for example, parking meters were privatised 10-years ago with a 75-year lease that has cost the city $US974m in lost revenue, so far.
Privatisation in Australia under the guise of ‘asset recycling’ has been used to lobby American politicians for the last couple of years. It was introduced to Australia by former Australian Treasurer, Joe Hockey. Hockey in his current role as American Ambassador has led the charge with assistance from others, including former New South Wales Premier Mike Baird. In Australia it involved selling state assets to private to help pay for infrastructure projects, and the federal government paid an incentive payment to add to the funding. There were no big cuts or deregulation involved. The super fund’s think selling it to the American public as “workers capital” rather than private, to pay for public assets will do the trick. The super funds have even re-branded: Public Private Partnerships in America, to Pension Public Partnerships.
You might be asking yourself: ‘Why should I care where or how Australian Super is invested if it’s bringing back returns?’ That’s a good question. America has inflicted neoliberalism policies around the world for the last 40-years, this has led to the global decay of infrastructure. The global race to fix ailing infrastructure (or to gobble up what’s left of public assets), is being touted by Australia’s Foreign Minister, Julie Bishop, as the answer to sustaining economic growth. Neoliberal policies are profit driven, whereas things like infrastructure maintenance are not very profitable. Hence the decline. Pretty ironic when you think about it.
Is it right or ethical for super funds to invest in a country that is also being deregulated within an inch of its life to make it easier for private with their investments? There are grave concerns for the plan to deregulate the country’s water supplies, some water utilities are already struggling to keep their water clean. Did you know that 16 million Americans get sick from dirty tap water each year? Deregulation, especially in regards to environmental restrictions designed to protect communities, will once again add to the monetary burden of cleaning it up onto the states and local governments. Even if super funds just invested in toll roads there like IFM Investors with their Indiana investment, wouldn’t it be better to invest in Australia’s infrastructure? In particular renewable energy, there’s a whole industry waiting to be untapped. Or perhaps the super funds could look to our neighbours in Asia needing infrastructure assistance, including being climate change ready. There is so much more to ethically invest in than road tolls and user charges around the world.
And on a final note, another concern that I have is if investing super into anything that makes a profit becomes the norm and accepted, what other ideas or policies that are unpalatable now, are lurking waiting for the right moment to be introduced? The privatisation of sidewalks in Australia? It’s already happening in Kansas City and Missouri.
There are only public assets (including public land), and services left to invest in or take over. If this were to happen what would the world look like? I don’t even want to imagine.