Systemic Privatizations and the Failure to ‘Shrink the State’: The Regulation of Insolvent Essential Services in the United Kingdom and Australia Academic Article uri icon


  • Utilizing Feigenbaum, Henig and Hammett's typology, privatizations in the UK and Australia may be described as ‘systemic’ in the sense that their aim has been in part to ‘shrink the state’. Privatizations of essential services such as water, rail and energy in both countries appear to have failed in this endeavour. One example of this failure in the UK is the proliferation of special administration regimes which are initiated by the state and regulate the resolution of essential service insolvency. The recent introduction of an energy administration procedure in the Energy Act 2004 (UK) is yet another example of this process. Regulation of infrastructure insolvency appears on its face to have taken a different course in Australia, relying, for the most part on the usual insolvency regimes. However, the utilization of a contractual model for state oversight in the case of railway company insolvency and the willingness of the state to intervene in the financial distress of electricity generators suggest the Australian approach has also resulted in maintenance of the state's role following privatization. This paper reviews the experience of the State of Victoria in the failure of a rail company and electricity generator and considers to what extent the non-statutory processes utilized by the state reflects its continuing role post privatization. In so doing, the paper evaluates the device of the UK special administration regime and in particular discusses the energy administration provisions of the Energy Act 2004 (UK).

publication date

  • November 2005