Significant changes in the attitudes of government, private industry and the general public have taken place over the last few years in relation to both the scope and the manner of execution of Australia's public sector activities.
From being restricted to the administration of particular acts of parliament governing public sector bodies,(the NARROW view) ,more and more organisations are being encouraged to look beyond their statutory obligations in the drive for improved performance, (the BROAD view).
In this context it is possible to view elements of the public sector as becoming commercialised in outlook. This "Commercialisation” of activities may lead to “Corporatisation” or even to "Privatisation” of the public enterprise. The process of commercialisation is facilitated by a broader interpretation of statutes whereas both corporatisation and privatisation require new legislation. As a consequence, commercialisation of an organisation may be considered as an informal process to "test the water- prior to embracing corporatisation or privatisation.
This Research Report addresses in general terms the relevance of this trend to Australia's economic wellbeing, and focuses particular attention on the costs and benefits of involvement of the public sector in international commercial business activity.
An associated issue that is addressed concerns the additional competition imposed on the private sector by the involvement of the public sector in commercial activities. This gives rise to claims about unfair competition and demands that improved access be given to the private sector to engage in public sector activities that have hitherto been regarded as the exclusive domain of the public sector.
Public sector operations generally have lacked the motivation and the measures for accurate and objective assessment of efficiency and performance, in contrast to the operation of market forces in a commercially oriented private sector. Where there is involvement of the public sector in commercial activities, costs and benefits associated with such activities are difficult to quantify in some instances.
Given the additional dimensions and risks associated with international activities, it is hardly surprising that political factors play a paramount role. Measurement of the net benefits to Australia from public sector involvement in overseas commercial activities becomes doubly difficult to measure accurately as identification and separation of the political and economic benefits and costs becomes intractable.
A review of published material provides a major input to this report, coupled with case study analyses of sections of the public sector based on personal experience and interviews with executives heading up particular public sector and private industry business.
By way of international comparison, the initiatives undertaken by the government of Singapore in deregulating its public sector are canvassed.
It is concluded that the process of commercialisation holds great merit in its capacity to:-
(a) improve the performance of the public sector, by retaining and attracting levels of human capital appropriate to the demands placed on Australia as a trading nation. A better standard of provision of public services and an improvement in the living standards of residents is likely to result as more effective use of human resources occurs.
(b) act as a catalyst to the private sector, which gains the opportunities to both utilise skills otherwise locked into the public sector and to compete for government business on a more level playing field.
(c) improve Australia's balance of trade performance, directly or indirectly, by making better use of Australia's limited human capital resources to promote exports, and to encourage the provision of import substitution, of goods and services .