Re: C Class back in service again !........well...

[pcc@ocean.com.au (Les Brown)]

rgg@deakin.edu.au (Roger Gillard) wrote in aus.rail:

>In article <36eb858f.3140310@news.ocean.com.au>, pcc@ocean.com.au says...
>>
>>
>>The only transfer of wealth so far has been to the government, not
>>from it. Freight Victoria paid a fair price for VLine Freight, some
>>would say over paid. The Kennett Government needs it to retire the
>>debt incurred during the Labour years, and to buy back what Labour
>>sold and leased back. Now I don't exactly agree with everything
>>
>>Les Brown
>
>   
>    I'm afraid I don't understand this obsession with retiring public
> debt.When government enterprises are privatised, the companies buying 
>them go into debt to but them. Private debt is more expensive than 
>public debt (lenders will lend to governments at a lower interest rate).
> Private companies usually expect a larger return on their capital,
> so we must be paying more after privatisation than before. The country 
>pays the interest on debt whether it is private or public. Unless 
>privatised organistions are dramatically more efficient than those 
>that are publically owned then we are being sold down the river.

That private enterprises go into debt in order to fund purchases is
perhaps fair enough. The cost of the debt is dependant on their credit
rating and that applies to governments also. Banks make no difference
between debts to governments and to private companies if they are of
equal credit rating. Plenty of third-world governments have worse
credit ratings than BHP at the moment.

The difference in private debt and public debt is that private debt is
not your problem - you don't pay for it unless you are a shareholder. 

There is not a problem with debt if it can be serviced by being a
profitable business. The railways at the moment are not profitable and
I, we, are all paying for it. Remember when Victoria's rail operations
were costing over a billion dollars a year? What normal business can
sustain such losses?

Private companies cannot expect a larger return by charging more. Why?
Because of COMPETITION! That's right, competition is going to restrict
by how much the new owners of Vline Freight can charge because if they
charge too much then they will loose business to the roads. It's that
simple! When road transport had restriction on what and where it could
carry it's freight, the railways were over-manned and inefficient. The
need to change only came about because the government was tightening
the purse strings and the railways had to compete for all their
freight with roads. It happened to most government railways all over
the world.

The only way you can get a larger return to pay off your bank loan is
to get greater efficiencies and, better still get more work! Yes, this
means that Freight Victoria is now going to have to get every damn job
they can get that will fill wagon and be damned efficient in how that
wagon is going to be delivered.

Les Brown