Public Values

Privatization: a reality check

Canadians really do not want to privatize the public services that are most important to them.

Even Stephen Harper has been muted in support for privatizationby Marc Zwelling

Along with deregulation and free trade, privatization is the third horse of the right-wing apocalypse.

The point of privatization is to shrink the state, turn over government functions to business and let taxpayers keep more of their money. Measured as a share of the economy passing through the hands of government, privatization is advancing.

In 1992, for instance, governments in Canada at all levels handled 40 percent of the gross domestic product (the value of the goods and services produced in the country). A decade later the state's role had declined to 30 percent.

As a share of the country's payroll, the public sector peaked in 1992, when government jobs represented 21.4 percent of total employment. The public share has continuously declined since and was 16.8 percent in 2005. (The figures are from Statistics Canada.)

Although the government's share of the economy has declined, the number of government employees has grown for seven straight years. There were 2.8 million government employees at all levels in 1999; there are more than 3.2 million today.

Public employees are more productive than ever. Despite a growing population, the number of government employees per 1,000 people has fallen, from a peak of 96.5 in 1991 to 84.2 in 2005. Statistics Canada says the shift results from fewer jobs in municipal and provincial government "but most significantly" in the federal government.

Not much of this shift is due to privatization, however. The last wave of privatization was more than a decade ago when most provinces sold off their phone systems, and the federal government privatized Air Canada, Eldorado Nuclear, the Canadian National Railways, Petro-Canada and the air navigation system.

Automation has made public employees more productive. The city of Ottawa, for example, bought longer buses that carry more passengers without the need to hire more drivers. Canadians can e-file corporate and personal income tax, substituting digits for paper and labour. Side-loading garbage trucks enable local governments to substitute one person for a three-member crew.

But the apparently shrinking role of the state is more illusion than reality. As the arch-conservative Fraser Institute noted with regret in 1998, "Free trade and globalization do not spell the end of the nation state. Government's share of GDP in Canada has increased from 13.3 percent in 1920 to 44.7 percent in 1996, in spite of increased international trade and investment over the same period. This pattern is mirrored in nearly every OECD country."

Why has privatization stalled? Public opinion won't stand for it. Wide-scale privatization is a political orphan; no party has adopted it. Last year an Ipsos Reid survey for the Canadian Union of Public Employees (CUPE) showed that two thirds of British Columbians opposed privatizing public school custodial service. In a 2005 Ipsos poll for CUPE, 75 percent in BC opposed privatizing municipal tap water. Only 33 percent agreed "the private sector would do a better job than the government at managing water services."

In a 2004 Ipsos poll in Ontario for the media watchdog Friends of Canadian Broadcasting, 76 percent opposed selling the provincially-owned TVOntario to a private broadcaster. Only 22 percent favoured privatization.

In federal politics, the privatization coalition is the Conservative Party. Nonetheless, Prime Minister Stephen Harper cancelled privatization of the crown corporation that operates the coal terminal in Prince Rupert, BC. The former Liberal government had put it up for sale. The last Conservative premier in Ontario, Ernie Eves, backed off privatizing the provincial hydroelectric system before the 2003 election (he lost anyway).

The polls highlight the difference between Canadians as consumers, who want the best deals, and Canadians as citizens, who want the best service. When consumers are unhappy with a store, they take their business somewhere else. When they are disappointed with a government service, however, people want better government service, not private service.

Because there is little voter support for privatization, advocates have regrouped around a stealth kind of privatization, the public-private partnership or P3. A private company builds a school, hospital, highway, sewage plant or prison, and the government leases or pays the company a fee to run it. The federal government is requiring that provinces and cities consider public-private partnerships when they build infrastructure that uses federal money.

The public service with the most rhetorical conflict over privatization is health care. Canadians are deeply ambivalent about private health care. To make privatization more attractive to voters, promoters promise to cut wait times for medical procedures.

After the Supreme Court of Canada, in 2005, struck down Québec's ban on private medical insurance to pay for basic services offered by the public health system, 65 percent told a national Pollara poll the decision will reduce waiting times "by increasing the supply of services." Across the country 70 percent in an Ipsos poll agreed that "I should be able to buy services from a private healthcare provider if I want to."

But by 57 percent to 39 percent, people also agreed that their province should ban private health insurance "and protect public healthcare in my province." Starkly inconsistent opinions like these are common when the public hasn't reached a final decision on an issue.

Here are some of the key factors in public support for the public values in public services:

  1. Democracy: People are emotionally attached to democracy. Privatization is undemocratic. Corporate executives running public services answer to their big investors and speculators. Only governments answer to the voters.

  2. Secrecy: Most privatization deals are negotiated and signed in secret. In a Vector Poll™, 67 percent said there's no reason the news media and the public should not know the details of public-private partnerships.

  3. Quality: Privatizers contend that their involvement in P3 projects reduces costs. But the public does not necessarily agree that the low bidder should carry out public services. Public values recognize that unionized public-owned services are better than non-union, investor-driven contractors.

    With a union to watch their back, public employees are more likely to blow the whistle on patronage. With union job seniority, government employees are more willing to train and help co-workers instead of viewing them as competitors. In a 2003 Vector Poll™, 62 percent agreed that by negotiating workloads and grievance procedures, public employee unions maintain high standards of service to the public.

  4. Security: The most admired professions are public employees: firefighters, nurses, doctors, teachers and police. What do they have in common? Their training and responsibility for security. Adding safety to any job makes it more likely that public opinion will want it provided by a government, not a company. A private contractor can sweep floors, but can a temp perform CPR on a student till an ambulance arrives? In a 2004 Vector Poll™, two thirds agreed it's legitimate to pay public employees who deal with life and death situations more than private sector workers.

    For Canadians the question of whether to privatize isn't ideological. People are pragmatic. The public's question is, privatize what? The more the job involves health and safety, the more people want the government to do the job. A 2006 Vector Poll™found that 73 percent feel wastewater and sewage systems are too important to privatize, compared with 51 percent for garbage collection.

People care most about the services they use most. Therefore, the users of public services should be the ones who lead the struggle to keep investors' hands off the public service. Unions and think tanks can lend their resources, but the leading defenders of public values should be the people who are most affected by whatever P3 project is in the offing. Parents can fight privatization in schools, patients (or their advocates) can fight privatization in health care, neighbourhoods can fight for public parks, municipal taxpayers can oppose water privatization, consumers against privatized electricity, and so on.

People also care most about services delivered by people they know by name. Most parents know the names of their children's teachers. How many know the names of the custodians? Studs Turkel once suggested that every major building should have a plaque with the names of all the construction workers who helped erect it. Similarly, garbage trucks should have the names of their crews on their sides. Bus operators should say hi to passengers. Parks and rinks should have boards that show the names of the city workers who maintain them, and the name of their union.

Finally, people want to know how to make things better, but they don't necessarily want to hear how awful things are now. Recently a teachers' union ran full-page newspaper ads proclaiming schools are under-funded "and we're all suffering for it, especially our elementary students." Children, the ad said, are being "punished." In 2003 another teacher union distributed election leaflets announcing "a crisis in our public schools... it's hurting your kids."

It's tempting to think that telling taxpayers how bad public services will generate sympathy for public employees and more government spending. But polls don't show the desired result. The public worries about outputs (results) — not inputs (funding, spending).

A better approach is to show how effective health, education and other public services are. Then show how much better they can be. People don't respond to requests or demands for more "funding." They want to know exactly what new funding would do. People respond to examples like, "with another dollar a week, 10,000 more kids would reach college or university." Or, "with another 20 cents a day, health professionals would cut medical errors in half."

Private schools don't try to recruit new students by saying that their students are suffering. Companies chasing government contracts don't say they're the best candidates because they're in crisis. The private-versus-public health care debate demonstrates a vulnerability in public services. When public confidence in public services weakens, voters turn to P3's, companies and contractors. Privatizers trash-talk public education, health care and utilities. People who care about quality, security, safety and public values, should uphold public services while continuing to push for better.

Marc Zwelling is a political advisor. The Vector Poll™ provides phone, mail and on-line polls and focus groups. For more information visit their web site below.

Links and sources
  The Vector Poll™

Posted: November 11, 2007

  Health care
  Public services
  Voices of privatization

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