"The real reason we are having this discussion is because we are, around the globe, being told there are scarce government resources. But that hasn't happened by accident. This is a government-created consequence of self-imposed tax cuts." — Larry Brown, NUPGE Secretary-Treasurer
Ottawa (13 Nov. 2014) — Instead of a love-in about new forms of privatization, representatives attending a special event held by the United Nations General Assembly Second Committee in New York City to discuss "New instruments of social finance" received a bit of surprise when it was Larry Brown's turn to speak.
Larry Brown exposes privatization schemes hidden under new language
The meeting was held to explore how impact investing and new instruments of social finance could contribute to achieving development goals in industrialized and developing countries. What Brown, who is the National Secretary-Treasurer of the National Union of Public and General Employees (NUPGE), explained to the meeting is that despite finding new language to use, they were really discussing privatization of public services.
"These new forms of privatization, like social impact bonds, are the evolution of a bad movie, the sequel, Privatization II," says Brown."Privatization schemes have failed so many times, and have become so unpopular, profiteers and governments have started using different language to make the proposals more inviting."
"But it's still privatization, plain and simple."
The lack of financial resources to properly fund public services is due to government tax cuts
Sir Ronald Cohen of Big Society Capital in the UK and Mario Marconi Archinto, Head of Philanthropy and Values-Based Investing at UBS AG Wealth Management & Swiss Bank who were also part of the panel discussions were proponents of impact investments, social impact bonds and development impact bonds. These schemes allow private companies to take over the building and administering of public services. The catch is that profit plays a huge role in every project, and the public is left picking up the pieces when the scheme fails.
"There is a fundamental difference between for-profit corporations where the legal requirement is to make a profit, with the service being offered only as a means to an end," Brown argued. "While with public services, the goal is to deliver the service. Those two methods of service delivery are not interchangeable, they are fundamentally different."
"The real reason we are having this discussion is because we are, around the globe, being told there are scarce government resources," said Brown. "But that hasn't happened by accident. This is a government-created consequence of self-imposed tax cuts."
Research has shown that with new forms of privatization, the results are fragmented services with higher administration costs, private companies dictating which public services to deliver and where, loss of government capacity to deliver services, loss of public control, accountability and transparency. Privatization is more expensive, as the government pays for the service, as well as for all the hidden contract costs.
Brown introduces Five Point Public Services Protection Plan to UN meeting
Under the plan, politicians would commit to
- providing demonstrable evidence that privatization will lead to improved service
- engaging an independent agency to perform a credible social and economic cost/benefit review
- ensuring that Canadians currently providing the service or overseeing the asset have standing during the review
- ensuring that the review is tabled for public debate in the relevant legislature or council
- guaranteeing that if, after public debate on the independent review, politicians choose to privatize a service, the employees currently providing that service retain their wages and benefits.
The UN meeting was held in advance of a major UN conference on the issues in Addis Ababa, Ethiopia in 2015.
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