AWH saga taints privatisation

by Richard Denniss in The Australian Financial Review

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Originally published in The Australian Financial Review on May 6, 2014

Economics textbooks have a pretty depressing story to tell aspiring business owners. It can be summarised as, “Don’t bother. You will never make any money and even if you do, your success will attract new competitors who will push your price and profits down.” But don’t worry, no one pays economists for the accuracy of their forecasts.

In reality, some people are so determined to go into business that they are willing to spend a small fortune to do so. Take Australian Water Holdings for example. Despite his extensive training in economics and his interest in the benefits that supposedly flow to consumers from privatisation and outsourcing, Arthur Sinodinos was willing to chair a company which sought to undercut the price of water maintenance at Sydney Water. What was he thinking?

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