As a piece of etymology, this is all well and good. What is more interesting is that the process of economic reform is turning qangos (in the new sense) into quangos (in the old sense). Take for example, the Sydney Harbour Tunnel. Before the days of micro-economic reform (and public sector borrowing targets), this would have been built under contract for the RTA, who would have collected tolls and paid them into consolidated revenue. Now it is supposedly the property of a private company who have constructed it under a BOOT (Build, Own, Operate, and Transfer) contract, under which the tunnel is to be handed over to the State after a set term. As is usual with BOOT contracts, the apparent free lunch disappears on closer examination. The State government threw in the right to collect tolls on the existing Harbour Bridge as part of the deal.
The really interesting question, however, is whether the tunnel is now genuinely private or not. The NSW Auditor-General thinks not; the contingent liabilities faced by the State under the BOOT contract are such that the Tunnel should be listed as an asset in the public accounts. The State government is not quite sure. With the mantle of 'commercial confidentiality' that typically shields questionable public sector financial transactions nowadays, it is almost impossible to determine the true story.
Examples of this kind could be (and are being) multiplied endlessly. When government business enterprises like water authorities are privatised, the result is frequently not a competitive firm, but a monopolist with profits determined more by government policy than by market performance. Such enterprises typically require close regulation to prevent exploitation by consumers. At the same time, they are so vulnerable to adverse policy decisions that buyers typically require advance guarantees of a favorable policy climate. Finally, the services provided by such firms are often such that they are 'too important to fail'. In effect, this ensures that bad business decisions will result, not in bankruptcy and ruin, but in a public bailout. The term 'quango', in its original sense, has never been more appropriate.