out of public services have found that service quality deteriorated (Evatt Research Centre 1990; Rimmer 1993; Egan, Montesin and Adena 1995; Fraser 1997), a finding consistent with international evidence. The main studies finding improvement or no change are those undertaken by Domberger and his co-authors (Domberger, Hall and Li 1995; Domberger, Doyle and Hall 1996).
In the private and public sectors, outsourcing has been used as a device to reduce wages. Although the Industry Commission (1996) found no systematic pattern of wage reductions following contracting out, the ACTU submission to the same inquiry found a number of cases where wages were reduced (ACTU 1995).
Quiggin (1994) argued that increases in work intensity were the most important source of cost savings associated with contracting out. By contrast, the Industry Commission (1996) argues that it is impossible to distinguish between increases in work intensity arising from contracting out and general changes in the labour market.
Policies of privatisation, private provision of infrastructure, and competitive tendering have been adopted in many countries in recent years. Nevertheless, the policy debate on these topics has, in most cases, been conducted on a national basis. Despite some early influences from the UK, the Australian literature has developed themes that have attracted little attention elsewhere. The most important of these themes relate to risk and its allocation. In particular, the Australian debate has shown that the fiscal viability of privatisation depends, in large measure, on whether systematic risk is better borne by governments or the private sector, or, in other words, on whether the high price of systematic risk observed in private capital markets is consistent with the hypothesis of capital market efficiency.
A second theme that has been developed more in Australia than elsewhere is that of redistribution. The crucial question is whether the apparent benefits of privatisation and competitive tendering reflect genuine improvements in efficiency or simply transfers of wealth and risk between different groups in society.
I thank Nancy Wallace for helpful comments and criticism. This research was supported by an Australian Research Council Senior Fellowship and Australian Research Council Large Grant A00000873.
Abelson, P. 1987a. Privatisation:A survey of the issues. Paper presented at the 16th conference of Australian and New Zealand Economists, Surfers Paradise, Queensland.
Abelson, P. 1987b. Privatisation:An Australian Perspective. Sydney: Australian Professional Publications.