Bob Howard, “The Discipline of Necessity,”
The Optimist, July-August, 1985, p. 9.
With thanks to Nadia Bloom.

The Transport Planning Consultants Travers Morgan Pty. Ltd., recently prepared a report for the Bus & Coach Association of New South Wales, comparing the operations of private bus services with the government run Urban Transit Authority.

The results will probably surprise nobody, but it is nice to be able to put some authoritative figures to what everybody knows anyway.

For example:

  • if private operators received the same level of government subsidy as the UTA, they could provide a free service, 24 hours a day, 7 days a week
  • if the private sector ran the government buses, at current frequencies and fare levels, they would reduce the annual deficit from $100 million to $10 million
  • UTA buses cost about $3.20 per kilometre to operate, private buses exactly half that amount
  • every government bus that goes into service costs about $60,000 a year more to operate than a private bus
  • the UTA employs one specialised mechanic for maintenance for every two buses, while private enterprise operators employ one mechanic for 10 buses
  • for every UTA bus on the road there are 4.7 employees, compared to 1.4 employees per bus for the private companies
  • the UTA suffers from high manning levels, sickness claims and workers’ compensation claims

Who would be brave enough to disagree if I suggest that investigators would turn up similar facts about other notorious government operators such as Telecom, Australia Post and the Main Roads Departments?

I might also add that the same basic disease is at work in the welfare and health systems, and, of course, the Trade Union Movement!

The problem with all these is that they have managed, by one means or another, to escape being subject to any final, external discipline. In the private sector this discipline is imposed by the absolute necessity of showing a profit. Any company that cannot do this does not survive for long. (The exception being, of course, situations where private monopolies or subsidies are granted by governments to private enterprises.)

The key to it all, however, is not so much profit, as the necessity for profit. Or, to put it another way, the absence of any guarantees. With no guarantees there is no choice. It is the necessity that makes it real, and imposes the discipline.

Its effect is as much psychological as anything. It affects the attitudes and values of the people concerned in ways they probably are not even aware of. Knowing you have no choice is a wonderfully simplifying force, as well as a powerful motivator and decision maker.

Private companies are efficient because they have to be. Government operations are not efficient because they do not have to be.

The continued existence of the UTA, Telecom, Australia Post, and the Main Roads Departments has been — at least until now — comfortably guaranteed. It is because we have in our well-meaning way tried to guarantee welfare, health care and — where the unions can manage it — job security, that we are finding the same intractable problems of inefficiency, waste and abuse that plague government businesses cropping up there. In all these cases there is no overall economic discipline because there is no necessity for it. The problem will not be solved until that fundamental flaw is corrected.