Privatization Fiction versus Fact
The advocates of privatization would have us believe there are a
lot of benefits to privatization. Over the years, a lot of myths
about the value and quality of public versus private sector services
have evolved. The privatizers like to exploit those myths. It’s
our job to help the public separate the fact from fiction.
Fiction: The private sector can do it cheaper and
that means lower taxes and a reduced deficit.
Fact: When all the bills are in, the bottom line
is that privatized services are rarely, if ever, delivered more
cheaply than they were in the public sector.
Fiction: The private sector is more efficient
and therefore will deliver a better quality product.
Fact: When it comes to efficiency it doesn’t hurt
to remember that the Principal Group, Dome Petroleum and the automobile
industry are all private sector operations. All have lost millions
of dollars and, in all cases, it was the public sector that bailed
them out or cleaned up the mess.
The fact is, when it comes to public services, the private sector
cannot and does not deliver a better quality product whether it
is road construction or support for abused children. Private sector
companies are in the business of making profits. There are two ways
to make money. One is higher charges to users. The second is cutting
expenses. A private contractor’s basic objective is to provide the
minimum level of service at the minimum price the market will bear.
That’s the way the market works.
Fiction: Private sector workers are more motivated
and will work harder.
Fact: While most people want to do a good job,
the fact is that public sector workers are more experienced and
are directly accountable to the public they serve.
Fiction: If we could just get the politics out
of it, everything would run better.
Fact: Government is about being elected, about
making decisions and being responsible. A department using contract
employees is still headed by an elected politician. All they’ve
done is put a buffer between themselves and the people who elected
them. Politics soon becomes the art of pleasing business and contractors
and not the art of pleasing people. When a private contractor takes
over, local residents frequently do not know who is ultimately responsible
for the public service. They do not recognize who to go to with
their complaints. Politicians will sometimes try to pass buck on
complaints. It’s not good enough. They were elected. They must maintain
responsibility for the services they have been mandated to provide.
Fiction: All politicians are crooks and they only
hire their friends or political pals. This doesn’t happen in the
private sector.
Fact: Politicians are accountable for who they
hire and the job they do. More than one Canadian politician has
been thrown out of office for irresponsible patronage.
Fiction: There are too many people working in
the government now. It wouldn’t hurt to privatize and get rid of
some of those bureaucrats.
Fact: When the layoffs come from privatization
it’s not the high paid political aides or deputy ministers that
lose their jobs. It’s the nurses, highway workers or agricultural
specialists who go.
The impact of these kinds of layoffs can be devastating on a family.
Rural communities tend to suffer more than larger centres. The loss
of 5 or 6 job or the removal of a few hundred thousand dollars from
a small local economy can, and does, have a tremendous negative
impact.
So Who Really Benefits From Privatization?
If privatization isn’t all it’s cracked up to be then why
is the government doing it and who are the real winners?
The corporate sector is the big winner. Business likes privatization’s
impact on the bottom line. And, since many large corporations pay
no taxes they’re not worried about the bottom line facing taxpayers.
Thousands of businesses have benefited from government contracts,
often without going through any public bidding process. Stockbrokers
and consultants also pocket millions of dollars in fees for doing
studies for government and acting as advisers for specific privatizations.
This article appeared in The Connexion
Digest #54, February 1992.
Reprinted from Impact, published by the Alberta
Union of Provincial Employees.
(CX4348)
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