Sensibly, the federal government abandoned plans to privatise the database of the corporate regulator just before Christmas. Almost inexplicably, the NSW government continues to pursue its plan to privatise the state’s land titles registry.

We say “almost” because this deal is explicable only in that it will raise a projected $1 billion to $2 billion. It is a one-off transaction to finance the upgrade of two football stadiums.

It utterly defies logic.

Privatising a government monopoly, an essential service with zero competition, defies logic full-stop. In this case: besides the loss of jobs, besides the loss of a reliable $130 million a year dropping into state coffers, besides the loss of security over critical information – perhaps to an offshore private equity group – and besides the spectre of rising litigation costs, there is the matter of tax.

It is reasonable that voters demand of their elected officials to know where their assets may end up and who might own them. Will the profits of the NSW Land & Property Information Office (LPI) end up in a tax haven in an entity controlled by a financier of weapons? The notorious Carlyle Group is one touted bidder.

So “on the nose” is the proposal auction off the LPI via a 30-year lease that the Law Society, the Real Estate Institute and the Institute of Surveyors have come out against it, as have staff and myriad other stakeholders.

Despite trenchant opposition to the NSW sale, South Australia is also tinkering with the idea of privatising its land titles office. The other states are watching on.

When it comes to leasing things to tax havens, state governments have form. Electricity networks in both Victoria and South Australia have links to tax havens.

NSW too; some 40 per cent of the Transgrid electricity sale last year went to two entities domiciled in the Cayman Islands.

The secrecy shrouding the auction of the LPI means the actual corporate entities lurking behind each bidding syndicate remain a mystery.

The public, which owns the asset, even has to rely on newspaper leaks, likely from investment banks involved in the sale, to speculate as to the identity of the bidders. According to press reports, the bidding line-up is down to three consortia and two private equity players:

– Carlyle Group

– Affinity Equity Partners

– Hastings Funds Management, Advara and First State Super

– Macquarie Infrastructure and Real Assets group and Link Group

– Borealis Infrastructure’s Teranet, and Computershare.

Advised by Morgan Stanley, the Carlyle Group is more than just an artful tax structurer. As a significant investor in the arms sector, and via its high political connections such as former US president George Bush Senior, it has a notorious track record of profiteering from wars, the Iraq War in particular. Even The Economist has written, “Carlyle Group gives capitalism a bad name”.

Stakeholders in the state of NSW concerned about sensitive details of who owns what land and how the state is divided up, have good reason for concern.

Then there is the bidding combination of Macquarie Bank and Link Group. The former is well-known for its sharp practises and the aggressive tax structures of its infrastructure plays such as Macquarie Infrastructure Group (sold to Transurban), Thames Water in the UK and Sydney Airport.

It would be good policy, besides the basic political courtesy of a transparent auction process, that any privatised asset not end up in a stapled-security trust structure. For one, as it is incumbent on the members of the trust rather than the trust itself to pay income tax, although members of these structures typically pay a tax rate of 10 per cent to 15 per cent rather than the 30 per cent company rate.

Selling to a trust therefore means one-third to one-half the normal corporate rate tax is paid. Further, private buyers are attracted to essential government services for the stability of their income; and so they can gear it up with debt to further reduce tax. It is not as if the LPI can go bust.

Link Group, part of the Macquarie consortium, is listed on the ASX. Over the past two years it has booked $1.5 billion in cashflows and paid just $2 million in tax.

The Hastings Funds Management, Advara and First State Super

syndicate looks the cleanest in terms of tax, though super funds pay half the corporate rate, at least tax is paid.

The fourth syndicate of Borealis Infrastructure’s Teranet, and Computershare is a mixed bag on the tax front. Although Computershare pays large licks of tax in Australia it also has a quiver of tax haven connections from Jersey, Guernsey, Bermuda, and the Cayman Islands, to the British Virgin Islands, Ireland and the Netherlands.

For its part, Borealis is a Canadian leveraged buy-out firm, which bids for public infrastructure and loads it heavily with debt, often from an associate at suspiciously high interest rates. It is noted for wiping out taxable profits in the UK thanks to big loans from its own subsidiaries.

In the broader context, there has been an insidious creep in state secrecy over privatisation and the use of taxpayer funds, as evinced by the $1 billion of taxpayer funds being deployed to finance a rail line for Adani’s coal mine in Queensland, a mine whose corporate entities have tax haven connections.

The least politicians could do is to insist, as a pre-requisite of sale, that all bidding proposals see the light of day before any deal is done, and all bidders are required to use an Australian corporation with no tax haven parentage.

This column, co-published by The Conversation with michaelwest.com.au, is part of the Democracy Futures series, a joint global initiative with the Sydney Democracy Network. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.