Why is the FG/FF, quietly carried out, #CETA privatisation agenda bad?
You overall pay more, both as a taxpayer and directly when public services are privatised. Since privatisation, your bills, energy bills, rail and bus fares rise far above inflation. The quality of your services is also damaged by privatisation. Simple example: raw sewage in our rivers and seas. Worse care in our HSE because of outsourcing. There are many examples of privatisation failing.
Here are 10 reasons why privatisation has failed – and will always fail.
1. You don’t have a choice – public services are natural monopolies
Public services and infrastructure try to provide all with the essentials needed to live day to day, day to year. Things like water, energy, public transport, An Post, council services, education and the HSE (if it was run right).
Privatisation was introduced because of a belief in free markets and consumer choice. But public services tend to be what economists call ‘natural monopolies’, or services where competition doesn’t really make sense. For example, when you take the train, you don’t really have a choice about which one to use. There is no real market.
Private monopolies are the worst of all worlds. You don’t have consumer power because you can’t go elsewhere. But you don’t have power as a citizen either. Contracts to deliver public services are agreed between private companies and government behind closed doors. There is very little transparency or public scrutiny. Public ownership with public accountability mechanisms, is what greater give the citizens of Ireland, a greater say – as well as more direct accountability. Profit as the priority, makes many services worse:
(a) Money from your bills and taxes should go into improving public services. But with privatisation, dividends must be paid to shareholders – FIRST.
(b) Interest rates are higher for private companies than they are for government. (Plus, there are the extra costs of creating and regulating an artificial market.)
For example, a privatised water company spends serious money on advertising, telling you that they are supposedly doing a great job. This is money that could be and should be, more invested in infrastructure to stop leaks and tackle sewage spills.
One of the top reasons why people want public ownership is that they want profits to be reinvested into improving services instead of going to private, elite, mostly unknown shareholders.
3. Cutting corners
The drive to maximise profit comes into conflict with the need to spend time caring, or spend money to meet people’s needs.
EXAMPLE (a UK one because FG/FF won’t do an Irish one. No guesses why!):
An Oxford University study found that outsourcing of UK NHS services led to an extra 557 deaths. Cutting corners is likely to be one of the main reasons why this is the case. Another Oxford University study found that when care for vulnerable children is outsourced, more of them are sent across the country away from their support networks and families – because it’s cheaper for the companies.
4. Cherry picking
Private companies cherry pick the profitable bits of a service and leave the rest. The rest of the state and public, are treated as second-class or of less/no value.
For example, bus companies will choose to run buses on profitable routes but ignore rural communities, unless government steps in with a subsidy (subsidy = increasing their profits even more). It’s more efficient to run buses as a whole network so that money from busy routes can subsidise quieter or rural ones. Public ownership makes it easier to provide a good and fair service for everyone, to everyone.
When lots of private companies are involved in delivering a public service, this can create a complicated, fragmented system where it’s not always clear who’s doing what (see #Seetec and #TurasNua for example) and/or little or no public accountability.
More generally, the public sector works well when it can be cooperative and integrated, and when information can be shared. For example, hospitals may need to communicate with GPs and carers to look after an older person who needs support at home. Adding private companies into the mix makes this coordination harder. People get lost in a further complicated, legal and paper mess.
6. Wrong incentives
When private companies run public services, they may not have an incentive to help tackle problems. For example, companies in the USA, running private prisons get paid more money if more people are locked up. It’s become a business incentive to lock people up.
Mixed motivations may compromise the professional standards of the staff involved in making decisions. In the US, doctors perform thousands of unnecessary operations for profit. US methods of operating and reasons why, are being extended into Europe. From body care, down to dental care, as EU states even advertise their services to other EU states.
7. Inadequate regulation
Regulator bodies are supposed to be standing up for the interests of the public. However, they have failed for reasons.
(a) Because FF/FG consistently won’t give departments greater powers that they need – despite being asked every year to do so.
(b) Because FF/FG consistently won’t make the legal changes needed, to increase accountability towards hired service, that are right now, far less accountable to the state and even PAC’s.
8. Lack of flexibility
Councils and government departments are responsible for meeting the needs of the public – but privatisation means less flexibility for changing circumstances. If an outsourcing contract with a private company needs changing, government must pay more to make changes or improvements, add in extras or to opt out.
Selling off public assets or public land (like RTE property) means
(a) we, the public, have fewer options and resources for delivering the services we’ll need in the future and
(b) while giving a quick cash injection, in the long run, does not resolve many underlying issues. It just temporary addresses part of them – till they and more, again return later. It’s more “kicking of the can down the road” stuff. Leaving other parties in later governments, to sort out a previous made mess. …Then the parties that originally made the whole mess, attack the new term, in-government others for not resolving it!
9. Loss of capacity
Handing over control to private companies weakens the public sector, reducing the skills and people available to provide high quality public services. Mariana Mazzucato and Rosie Collington write in their book ‘The Big Con‘ that consultancies in particular have hollowed out state capacity. ‘The more governments and businesses outsource,‘ they write, ‘the less they know how to do‘. And when private companies fail to deliver, the government (local or national) often doesn’t have the time or expertise to force them to keep their promises.
10. Risk of bailouts
Public services are vital, they’re not optional extras, and so they are often too big and too important to fail. This means the government stands ready to rescue private setups in their hour of need. Ireland banks, anyone? Ones we had NO OBLIGATION to help – but left to do so! ‘Gun put against our head’ time. Left with little choice – or told we had no choice.
When privatisation goes wrong, the taxpaying public are again left to pick up the pieces. Citizens take the risk – while shareholders walk away with the profits.