International policy expert Dexter Whitfield says nearly a quarter of privatizations end in disaster, adding: “If you’re told a car has a 22 per cent failure rate, you would never buy it."
Ottawa (07 Nov. 2014) — Privatization started a generation ago as sporadic but unsuccessful attempts by tax-starved governments to provide crucial public services. But as delegates to an international conference in Ottawa heard in late October, a global “privatization industry” has now developed.
Secrecy and sleaze surround privatization industry
Made up of wealthy business owners, corporate CEOs, lawyers, accountants, and former politicians, the privatization industry is using secrecy and sleaze to dupe citizens into privatizing more and more of their public services. If left unchecked, it will strip Canadians of our common wealth, our common values, and our democratic control of our health care, education, infrastructure, and even of our government.
“We know how dangerous the privatization industry is, and we have a responsibility to our members and to all Canadians to stop it at every turn,” said James Clancy, National President of the National Union of Public and General Employees (NUPGE) during the conference. “The National Union is opposed fundamentally to privatization.”
From October 28 to 30, 2014, the International Conference on New Forms of Privatization gathered more than 100 trade union leaders, academics, and researchers to compare notes and talk strategy about facing off with the well-funded privatization industry.
Attitudes about the public service have been 'poisoned'
It won’t be easy said Public Services Foundation of Canada President Duncan Cameron. “When I worked in the public service, it still enjoyed the respect of Canadians,” he said. “As we all know, attitudes about the public service have been poisoned,” helping to fuel an appetite for privatization despite an ever-growing list of schemes gone terribly wrong.
International policy expert Dexter Whitfield agreed. The Director of the European Services Strategy Unit, Whitfield has closely monitored privatization in the UK and around the world, He’s found very few examples of privatization schemes that delivered on their promises, and that nearly a quarter end in disaster. “If you’re told a car has a 22 per cent failure rate, you would never buy it,” he said.
And yet, Whitfield said that the industry has succeeded in one key area: hiding its failures and seducing politicians of all political stripes. “There is now, unfortunately, political consensus about privatization,” he told the conference. “And the speed of privatizations is increasing.”
The faces of the privatization industry
NUPGE National Representative Andrew McNeill walked the conference through some of the ways the privatization industry disguises its schemes as something other than privatization. The current favourite is “public-private partnerships,” a.k.a. P3s or PPPs, but McNeill noted the privatization industry is also using other disguises such as “asset recycling” and “social impact bonds.” But no matter the name, McNeill said the schemes all put control of public services into the hands of organizations over which the public has no control.
Jordana Feist, a researcher with the Canadian Union of Public Employees has kept a close eye on the privatization industry and has examined many of the service-delivery studies that municipal governments have commissioned from such accounting firms as KPMG, Grant Thornton, and PricewaterhouseCoopers. Although these companies promise governments unbiased analysis of the costs and benefits of a specific privatization scheme, Feist has found that much of their “analysis” is actually just “cut-and-paste” privatization propaganda.
“A KPMG report for Prince George recommending privatization was nearly word-for-word the same as a KPMG report for Toronto,” she told the conference. “It looks like they just did a cut-and-paste.”
Fraud, kickbacks, inside deals
Other key players in the privatization industry are lawyers such as those at the Toronto firm McCarthy Tetrault and McMillan, financiers such as Royal Bank of Canada, and engineering firms such as SNC Lavelin. These companies bring on-board former politicians such as former Ontario Finance Minister Dwight Duncan and former federal Conservative Party Cabinet Minister Monte Solberg to lend credibility and drum up potential sales.
It’s easier to see what motivates service-providing multinationals such as MAXIMUS (which profits from British Columbia’s health insurance and drug benefits program), Serco (which profits from CFB Goose Bay's sercurity services), Morrison Services (which profits from food services in hospitals across the country), and First Student (which profits from school busing). Many of these companies engage in dubious activities—Serco and SNC Lavelin currently face fraud investigations stemming from the privatized services they provide, while MAXIMUS reached a $43 million settlement to the U.S. Department of Justice—but politicians remain tempted to privatize their services to them.
Privatization thrives under tax cuts
According to the former Clerk of Canada’s Privy Council, the reason for that temptation is simple: politicians’ obsession with tax cuts. Alex Himelfarb told the conference that massive tax cuts over the past 30 years have left governments at all levels desperate to find ways to deliver the services Canadians rely upon.
“How we talk about taxes has become dangerously distorted,” Himelfarb told the conference. “We think of them now as a burden and we’re happy when they’re cut, but we never think about what we are giving up.”
What we’re giving up, said Debi Daviau, President of the Professional Institute of the Publc Service of Canada, are strong services delivered by people who earn an appropriate wage and whose primary motivation is the public good. "Good public jobs don't turn into good private jobs with privatization,” she said.
Instead, they turn into low-wage, insecure jobs in which the primary motivation isn’t the public good but ensuring profit for the wealthy few. Daviau said that’s not the kind of Canada most Canadians want and encouraged delegates to speak about privatization in that light. “We need to appeal to Canadians’ values.”
The delegates left the conference ready to do just that. NUPGE's Component leaders, for example, agreed to make privatization its bargaining priority.
“The public is waiting for somebody to start talking about the way forward,” said Clancy in his closing remarks. “We're the ones to do it.”
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE