Melbourne's Fortunes Rumble, Unions Grumble

Only five years ago, the state of Victoria was the butt of Australian jokes:

"What's the capital of Victoria?" asked one wag. "One dollar, fifty cents," came the reply.

After 4-1/2 years under Liberal Party Premier Jeff Kennett, no one laughs at Victoria anymore. The state, at Australia's southeastern edge, has slashed debt and unemployment by about a third, and its economy grows 4 percent a year, outpacing the country as a whole.

"Based on employment growth and retail sales, we're stronger than the rest of Australia," says state Treasurer Alan Stockdale

Melbourne, the real capital, certainly looks thriving. Shoppers crowd the Melbourne Center, a multilevel mix of stores, restaurants, and tourist attractions. Victorians sit under colorful umbrellas at cafes along the banks of the Yarra River. Expensive restaurants are fully booked.

The private sector is eating well, in part, because the public sector went on a diet. Victoria launched an aggressive program to literally go out of business.

The state "privatized," selling various operations - such as six electric power plants - that in most free-enterprise societies are run by private business. The money - $18 billion (Australian; US$14 billion) went to debt reduction.

Jennie George, the president of the Australian Council of Trade Unions, says the sales have raised the costs of electricity and reduced services. "Don't take my word for it. Just ask anybody on the street," she says. However, state audits found a reduction in outages, and manufacturers claim lower costs, by an average 10 percent.

The state plans more privatization, including its natural gas network, two ports, and public transport. "It's all part of our effort to make Victoria more efficient and the best place to do business," says Mr. Stockdale.