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A new reason for privatisation: Saving Social Security - Austrian Edition

by generic Thu May 22nd, 2008 at 05:08:01 AM EST

Conservatives in both Greece and Austria seem to have found a new rationale for privatizing public assets.

talos:

When Austria's finance minister announces plans to privatize the railways and build a social security fund with the proceeds...
Ah, Austria too? The Greek PM said words to the same effect (not limited to the railways). They're on a selling spree which they aim to portray as a way to keep the SS system out of trouble (they're meeting unexpected resistance too, but that's a diary of its own). Do EU governments have the same political advisors or what?

I'd very much appreciate information whether parties in other European countries also have explicitly linked privatisation with financing social services.

Below is a short summary of the plans of the Austrian People's Party (ÖVP) and the reactions of the other parties.

Are the 'reformists' becoming desperate, or just even more cynical? Diary promoted with minor edits by DoDo


The first mention of a social security fund - or, as finance minister Wilhelm Molterer calls it, "Österreich-Fonds" [ = Austria Funds] - I could find was his May 15th "Rede zur Lage der Nation" styled after the American State of the Union speech.

The immediate background is a crisis in home care that has been in the news since before the elections in 2006. Former chancellor Wolfgang Schüssel's statement: "There is no nursing-crisis [Pflegenotstand]" was instrumental in the loss of popularity costing him his re-election. Public subsidies for home-care are far from high enough to cover the costs, and most people working in the home-care sector do so illegally.

In an interview with the national radio station Ö1 on May 17th, Molterer talked about what to privatise:

Die Österreichische Volkspartei
Pflege-Fonds: Je schneller, desto besser
The Austrian People's Party
Healthcare Funds: the faster the better
Thema für mögliche Privatisierungen bzw. Verkäufe sind die Post AG, der ÖBB-Güterverkehr, der Verbund und die Bundesimmobilienbesitze. Es gilt, die Kerneinflüsse zu wahren, aber die Staatsanteile - auf 25+1-Aktie - zu senken.Targets for possible privatisation resp. sale are the Post AG, the ÖBB [state railways] freight traffic branch, the Verbund AG and federal real estate holdings. The aim is to keep core influence, but to reduce the government stake to 25%+1 share.

The Verbund being Austria's biggest energy corporation.

That seems far less ambitious than initially thought, maybe partly caused by the solid parliamentary opposition.

Just so you know that despite all this talk about "core influence" he really believes in privatising, he has this to say:

Privatisierungen sind ein taugliches und erfolgreiches Mittel. Sie machen Österreich stärker, Unternehmen erfolgreicher und schaffen Arbeitsplätze.Privatisations are a suitable and successful means. They make Austria stronger, businesses more successful and create jobs.

Reactions

The Social Democrats (SPÖ), the bigger coalition partner in the current Grand Coalition government [see Almanax's diary], had the following to say:

× SPÖ × Pflegefonds und Privatisierungen × × SPÖ Care funds and privatisation
Grundsätzlich sei die SPÖ für einen Pflegefonds, aber Molterer wolle den Fonds lediglich als "Vehikel für eine uralte konservative Forderung" verwenden - für Privatisierungen. Diese seien im Regierungsprogramm jedoch nicht vorgesehen "und werden mit der SPÖ auch nicht stattfinden", so Kalina. Wenn Molterer jetzt die Privatisierung der Bahn fordert, solle er nach Deutschland oder England blicken.In principle, the SPÖ is for a care fund, but Molterer wants the fund only to use it as a "vehicle for an age-old conservative demand" - for privatisations. These are not included in the government program and will not take place with the SPÖ", Kalina said. If Molterer now calls for the privatisation of the railways, he should take a look towards Germany or England.

I'm not sure if lumping together the UK and Germany helps his case. Not that his case needs all that much help.

The Greens decried Molterer's exploitation of the care crisis to sell off profitable assets.

The Freedom Party [far-right, Haider's former party] seems to be opposed and warned of threatening "Americanisation".

Only the BZÖ, a small (4%) offshoot of the Freedom Party [created by Haider and his supporters] seems to be in favour.

At least for now, the chances of further plundering of public assets under the guise of social security seem low.

Display:
I'm not sure if lumping together the UK and Germany helps his case.

Well, in rail privatisation, I think it fits, even if Britain is still much worse than Germany. I actually laughed out aloud when I read that quote, many thanks.

I am happy that not only the Greens but the SPÖ is so combative about this -- and even that Molterer only dared to threaten railfreight is a relief.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon May 19th, 2008 at 05:19:38 PM EST
Your welcome.
Railfreight is the logical first step, because it is the most profitable part. Personal transport was in the red again last year.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Mon May 19th, 2008 at 06:12:05 PM EST
[ Parent ]
the New Zealand government will re-nationalise the railways.
See:
http://jacobchristensen.name/2008/05/05/new-new-public-management/
by Dr Minorka on Thu May 22nd, 2008 at 11:47:12 AM EST
[ Parent ]
I'd very much appreciate information whether parties in other European countries also have explicitly linked privatisation with financing social services.

I can't think of an indirect example, but direct examples abound: healthcare privatisation is sold in Europe as one bringing in needed capital, and claim allowing extra care for customers who can pay will also pay for improvements in basic service.

I wonder what Metatone has to say about this.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon May 19th, 2008 at 05:22:54 PM EST
If privatisation and PFI are so effective, then how come we never see the government buying military ships, tanks and aircraft through these methods? surely by the argument we see everywhere else, we'd be getting  much more bang for our buck? If the government isn't willing to finance this part of its budget because its too important, then surely this shows up the unreliability of privatisation and the PFI model?

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon May 19th, 2008 at 05:36:14 PM EST
[ Parent ]
AirTanker

AirTanker is a UK company dedicated exclusively to providing the Future Strategic Tanker Aircraft (FSTA) to the UK Ministry of Defence (MoD).

Under the world's largest Defence Private Finance Initiative (PFI) contract, AirTanker will deliver a service that provides comprehensive air-to-air refuelling and air transport capabilities to the Royal Air Force (RAF), using new, multi role tanker transport aircraft derived from Airbus A330-200 commercial airliners.

With the contract and the financing in place detailed preparations are now underway to enable service delivery to begin from 2011.

NDS - News Distribution Service - Thursday 27 March 2008 13:39 - Ministry Of Defence

A fleet of new Airbus A330-200s will replace the RAF's TriStar and VC-10 aircraft under a £13 billion PFI deal signed today with AirTanker Ltd, announced Baroness Taylor, the Minister for Defence Equipment and Support.

The aircraft - which will be owned by AirTanker under the terms of the deal, although they will fly in RAF 'colours' - will undertake air to air refueling and passenger air transport tasks. The aircraft are expected to enter service around 2011, to serve for three decades.



The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)
by Elco B (elcob at scarlet dot be) on Thu May 22nd, 2008 at 06:37:08 AM EST
[ Parent ]
Holy hell...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Thu May 22nd, 2008 at 08:51:28 AM EST
[ Parent ]
I take back my comment of a couple of days ago about never seeing PFIs in a defence context.

Does the company have the right to withdraw their assets if the government engaged in excessively risky activities with them?

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Thu May 22nd, 2008 at 09:36:42 AM EST
[ Parent ]
I don't now all the details of the contract, it's very recent and a lot of questions remain, like wich crews (military or civilian) will fly this birds, insurance costs......

But the idea is that when the military don't need the tankers (imagine, no more wars) the company can use them for civilian (charter) freight or passenger (+240) transport. This plane, the A330-200, can do this different tasks without reconfiguration.

The struggle of man against tyranny is the struggle of memory against forgetting.(Kundera)

by Elco B (elcob at scarlet dot be) on Thu May 22nd, 2008 at 10:58:34 AM EST
[ Parent ]
Perhaps Bush & Cheney have shown them the wisdom of having private military contractors such as Blackwater

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 23rd, 2008 at 02:21:01 AM EST
[ Parent ]
In most of these cases there is one primary motive: LET MY GUYS GET THEIR HANDS ON THIS MONEY! Even if "their guys" only pocket 3% of the money and effectively flush the remainder that is o.k.---so long as the blow up doesn't come for a few years.  So think the cleptocrats in the USA and, evidently, in Europe.

In the US this is always presented in the context of "Social Security is Doomed," with the sub-text "we have always said this was a very bad idea and won't work. See, we are right."  Meanwhile, they raise withholding for Social Security to levels that would be sufficient, but use the additional revenue to finance deficits.  In eight years Clinton reduced the deficit so as to better enable the government to handle the coming surge in demand from the baby boomers.  Didn't take W long to reverse that. Then they blame "government" for their own cleptomania.  "See, even when you raise withholding there is still not enough."  (There never will be so long as Social Security obligations are taken "off budget." So we might as well cut taxes on the wealthy. Getting the money (back) from the rich is of course, "Class Warfare."

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 21st, 2008 at 12:24:40 AM EST
In addition to allowing the hands of 'their guys' on the money, it also ties the future pensions of the working/middle class to the financial markets. This is very useful in times of busts, when lucrative bailouts of high-power investors also benefits (to a much smaller degree) 'ordinary' people. The better to make more entities that are 'to big to fail'.
by someone (s0me1smail(a)gmail(d)com) on Wed May 21st, 2008 at 11:16:39 AM EST
[ Parent ]
Not to mention that the high powered investors that are bailed out are mostly "their guys."  That is why I am taking the hit of inflation and leaving my paltry retirement savings in "cash."  Most investments promising reasonable yields are at risk for substantial haircuts, with the benefit accruing to those same underwater "high powered investors."

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 21st, 2008 at 12:50:58 PM EST
[ Parent ]
I found the idea stated and posted in the WB website, as advice towards post communist countries in 1995. It's signed by Jeffrey Sachs:

In institutional terms, long-term reform should aim for a shift to a pension system based on individual savings accounts, as in Chile, as opposed to the current state run, pay-as-you-go pension systems. The individualized savings schemes let each household choose its own desired level of savings according to its particular intertemporal preferences and circumstances. The individualized system also eliminates the debilitating sense of universal entitlement that helped to bankrupt the old regimes and that still pervades the new ones. The privatization process can be linked to the pension reform, by earmarking privatization revenues or enterprise shares now held by the state to help finance the changeover to a private, individualized pension system.

The Chilean system, I note, is considered something between an utter failure and very problematic by Chile's full political spectrum.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu May 22nd, 2008 at 08:00:32 AM EST
Now that is quite a find. Many Thanks.

Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Thu May 22nd, 2008 at 09:21:35 AM EST
[ Parent ]


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