nationalized their rail systems, many were subsequently privatized; whereas in
Australia, apart from dedicated mining lines, the rail systems remain publicly
owned (but with some significant private freight operators).^2
The Australian state-owned railways were large monopolies; until well into
the twentieth century they employed more workers than any other enterprise;
their main workshops were the largest establishments in secondary industry;
and they dominated state budgets.^3 The railways’state ownership, monopoly
status, and large size all helped shape their history as enterprises, and their
wider influence on economic, social, and political life.
Whatever the initial balancebetween itscosts and benefits,thestaterailsystem
that evolved became ever less efficientasitcollidedwiththeformationofstrong
labour and country parties. It offered those forces ample grounds for institution-
alized rent seeking—indeed, the risks were already apparent in the 1890s.
What difference did the early advent in Australia of public ownership of rail
have on the railways as enterprises? How did the experience in rail affect the
ownership and operation of other public utilities and institutions more
broadly? What effects did the railways have on Australia’s economic and social
life, and on politics?
The thesis of this chapter is that the institution of state-owned railways
reverberated through the Australian economy and society of the twentieth
century, most directly through the effects on the efficiency of the railways
themselves and of transport modes generally, and indirectly through the
initiation of independent statutory authorities; through the effect on attitudes
and policies towards monopoly and competition, as socially beneficial
arrangements; and via union and Australian Labor Party political influence.
9.1 Sowing
9.1.1Why Government Ownership?
We begin withaetiology: how the Australian governments chose public own-
ership and operation of railways, and why they persisted with what the
eminent economic historian, Noel Butlin (1959), called‘colonial socialism’.
In the late nineteenth century and beyond, Australia had an international
reputation not only as a social laboratory, but also as having an economy
that was heavily‘socialized’, that is, replete with state-owned enterprises,
and not merely those typically owned by local government. However, the
agreed interpretation, especially after Albert Métin’s book (Métin [1901]
(^2) Pacific National since 2002; and QR National (now Aurizon) since 2010.
(^3) For example, in 1923–24, for Australia as a whole, gross revenue from state railways and
tramways, £45m, was more than double state taxation revenue, £20m. (ABS 1925, pp. 387–91.)
Socialism in Six Colonies: The Aftermath