Investigation on Privatisation (Telstra)

Essay by semper.fi11High School, 11th gradeA, April 2008

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1.0PRIVITISATIONThe term Privatisation can be defined as the transfer of activities from the public sector to the private sector.

2.0GBEThe term "GBE" is an abbreviation for Government Business Enterprises, which means businesses owned solely by the government, thus not privately owned.

3.0ARGUMENTS FOR PRIVATISATION OF GBES3.1Reasons ForThere are many positive reasons for privation, these include:-Privatisation many help reduce the inefficiency that previously existed in large government organizations.

-Privatisation also reduces the number of situations in which the government is both the umpire and player. Government run business may also have unfair advantage over private enterprises. They have prestige of official backing with guaranteed payment bills. This would allow government businesses to have a greater security financially, allowing them to build a stronger position in their market.

-Firms operate more efficiently in the private sector because they are trying to maximize profits.

-Profit provides an incentive in the private firm to operate with less waste and focus towards the needs of the consumers.

-Money can be raised to increase government services or to pay for tax cuts for private enterprises, making taxpaying companies an asset to the community.

-Privatised GBEs may operate in a more innovative and less bureaucratic manner and thus being more responsive to the needs of consumers.

-Ordinary people become shareholders and take a greater interest in economic matters (people's capitalism).

-A higher opportunity cost may occur when placing taxpayers' money to fund the government businesses, bearing too high a risk. Privatisation would then place the risk into the hands of the owners, rather than the hands of the economy as a whole.

3.2Reasons AgainstThere may be many positive reasons for privation; on the other hand there are also crucial points against privatisation of GBEs, which may include:-Public monopolies simply become private monopolies. They are then concerned...