aluers and valuations are critical to the work of government at all levels, and public confidence in a good many functions of government, especially in relation to a large array of taxes and charges, including land rates, have long depended on a reliable and independent valuation system. Since 1910, the Commonwealth (and ACT and Northern Territory governments) have relied on the Australian Valuation Office, inside the Australian Taxation Office. Public confidence in its performance, professionalism and its methodology has been high. Over recent decades, the AVO has charged client agencies and government for its services, and turned a modest profit, though it is now said to be facing an operating loss this year. Annual reports record high satisfaction from agencies that had engaged it. That would include the ACT government, which has depended on the AVO for valuations of the unimproved capital value of ACT leaseholds for rating and land tax purposes, as well as a range of other services.
Last week the federal government said it would close down the AVO by June, and retrench 198 staff. The parliamentary secretary to the Treasurer, Steven Ciobo, used somewhat inverted language to say ''a compelling case for the Commonwealth providing its own valuation services no longer exists, particularly given that there is a highly competitive market of private sector providers''. He said the office was becoming ''unsustainable'', with revenue dropping sharply because of technological changes in the valuation industry and declining use of its services by government departments. On top of predicted operating losses, the AVO would have needed an extra $1 million to bring its IT equipment up to date.
The decision deserves more explanation, more public and contestable explication of the reasoning behind it, and, probably, closer analysis of the consequences. This is not because there is any automatic reason to think that only a public agency could do the job, or presumption against privatisation or contracting out. But a good deal is at stake, even apart from the jobs and careers of a significant number of public service professionals, and, frankly, politicians hardly have a good record in such management decisions.
The opposition and unions have criticised the decision as ideological. Andrew Leigh, the member for Fraser, has said it smacks of a preoccupation with cutting government services without regard to their effectiveness.
A host of decisions about contracting out services made at the height of the ''black hole'' cuts of 1996 were unwise and cost the nation a lot of money. Among these were sales of government offices, accompanied by rent-backs (which was a bonanza to speculators with long-term increased costs to the public purse), and moves to ''rationalise'' the procurement of IT (also an expensive fiasco, with continuing costs to government). Previous Labor governments had opened the government legal services market to private firms, but this process was also greatly accelerated in the late 1990s, at least until an independent review concluded that the new system was causing costs to balloon, the quality of services to decline, and triggered questions about whether agencies, and law firms, were paying sufficient attention to the public interest and expectations of government as a client.
As it happens, many of these bad decisions, which flowed from an assumption that the private sector could do it better than the public sector, were causes championed - as matters of principle about government getting out of markets for services that could be provided by the private sector - by people on the present Commission of Audit. The cynic might note these were never held to account for their misplaced faith in some dogma, or the consequent cost to taxpayers. The record does not mean contracting out property valuation services is an intrinsically bad idea. But it does suggest that something more than an undisclosed document that failed to persuade a parliamentary secretary is required. What is also needed is clear evidence that government, in getting its valuations from a field with only dubious claims to being professional, is properly protecting not only the public interest, but the different nature of government as a client.