Friday, September 04, 2009

Privatise Jersey Post – Now!

Over at Jersey 24/7, Clameur de Haro’s fellow-blogger made the point a couple of days ago that it’s time Jersey Post was sold off. His reasoning was based specifically on the potential damage likely to be inflicted on the local retail sector by Jersey Post’s new Ship2Me service, but he is undoubtedly right in the wider context as well. The case for the full privatisation of this business and its disposal out of public sector ownership and control entirely is overwhelming.
Initially, the economic philosophy argument. Generally, being naturally less efficient than private enterprise, government should restrict itself to providing only those services which the private sector is unable or unwilling to provide. Throughout Europe, mail and postal services are increasingly shown to be capable of being willingly delivered by the private sector at reasonable cost and to an acceptable return. Where is the compelling evidence that Jersey is an exception?
Subsequently, the practical points. A Jersey Post continuing in even partial public sector ownership is undesirable on at least three counts: firstly, it’s a monopoly, which is bad enough; secondly, it’s a public sector monopoly, which is even worse; and thirdly, it’s a unionised public sector monopoly, which virtually guarantees sub-optimal operation and unresponsive customer service.
Any reader who doubts the latter should try visiting Broad Street on a busy lunchtime and noting what proportion of total counter positions are actually open. Rarely does the ratio exceed 50% (even during the long queues of the annual pre-Christmas rush): presumably this is mainly because of union resistance to instituting shift patterns which would deploy the greatest numbers of customer-facing staff precisely at the times of peak customer demand, exacerbated by an inherent management disincentive, stemming from the business’ position as a semi-state-owned monopoly with guaranteed protection from competition, to even tackle this issue.
Does anyone really imagine that this degree of insensitivity to customer demand could be sustained if Jersey Post was a 100% private sector enterprise accountable to multiple shareholders, and forced moreover to compete with other mail service providers on price and service levels? As many of CdeH’s acquaintances have remarked, it was only the arrival of Sure and the ending of Jersey Telecoms’ monopoly which forced JT to provide a retail facility in the main shopping precinct.
And then, to add insult to injury, in recent years the wealth-creating private sector has had to endure the sight of Jersey Post executives both publishing excessively self-congratulatory annual statements and paying themselves handsome bonuses commensurate with private sector out-performance in the face of stiff competition; totally unjustified in the case of a protected, esentially public sector monopoly.
It’s a fairly openly-expressed opinion in the Island’s financial and business community that when the full disposal of Jersey Post was looked at a few years ago, potential buyers were scared off by the size and extent of the potential future liabilities represented by the (typically for the public sector) exceptionally generous but under-funded employees’ pension scheme. And that only by promising that the taxpayer, rather than the purchasers, would retain these liabilities could the States even get potential buyers to pursue their initial interest.
Neither that particular issue, nor the strength of the conceptual argument for full privatisation, nor the opportunity cost to the Island of the States’ non-realisation of this asset at a time of financial stringency, are going to go away at any time in the foreseeable future. And transferring Jersey Post to private ownership in its entirety would also blunt the criticisms from retailers about its (totally legitimate) expansion of fulfilment business on the grounds of its public sector component.
It’s vital therefore that the States develop the resolve to resist and defeat the inevitable specious arguments – which will be superficially predicated on fears of reduced customer service, but will actually be founded on ideological committment to state ownership and hostility to private enterprise – and move to end both Jersey Post’s increasingly indefensible monopoly and its protected, even quasi-public sector, status.
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