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New book challenges privatization claims

CUPE
Mar 31, 2010

One of the world’s leading authorities on the privatization of public services has published a new book dismantling the corporations’ sales pitch.

Professor Dexter Whitfield has assembled his wide-ranging work on privatization into a new, intensively researched and detailed book. Global Auction of Public Assets outlines how over the last three decades major international corporations have fought to turn public services that meet basic human needs into commodities to be traded.

Whitfield is the director of the European Services Strategy Unit, an agency committed to the provision of good quality public services by democratically accountable public bodies.

In 2008, Whitfield made an engaging presentation to CUPE New Brunswick’s P3 Summit. He set Canada’s work to keep services public in the context of the global push by corporations to turn public services into profit-making ventures.

His book traces the history of privatization and public private partnerships from the time of Margaret Thatcher. It provides a detailed description of the companies that play a leading role in Canada, South Africa, England and Australia.

Whitfield documents the growing importance of infrastructure around the world, because of both the “infrastructure gap” and future infrastructure needs that will be brought on by climate change.

He challenges the myths used to sell privatization, identifying that “[n]early 1,000 PPP and privatization projects have failed, were distressed or have been renegotiated.” Where failed P3s have been renegotiated, he finds that overwhelmingly the companies are the winners.

When services are privatized, the public loses both transparency and accountability. Whitfield writes that with P3s, everything is determined by contractual relationships, “yet a complete or perfect contract does not exist, any more than perfect competition or procurement.”

That sentiment was recently echoed in the business case for sewage treatment in Victoria, B.C. which found that P3s must rely on the operating contract “to force private sector parties to respond to difficult situations with customers.”

Whitfield disputes claims of private sector efficiency quoting an International Monetary Fund study that found the empirical evidence for this is, at best, mixed.

Whitfield outlines how corporations reap outrageous profits from building and operating P3s, then refinance their borrowing, and finally resell their equity to other P3 consortia.

Whitfield makes the case that these multinational corporations are determined to undermine the role of the state in meeting the needs of its citizens. Citizens pay the price of privatization through lost public control; increased taxes tolls and tuition fees; and other out-of-pocket costs for education and health care.

He calls for a radically different approach to public infrastructure procurement. That means closing the financial casino that is the global infrastructure market and recognizing that public debt is needed to deliver public services. It means recognizing that we can’t have excellent public services and very low taxes. And it means looking at new kinds of taxes on highly-mobile capital. Regional infrastructure funds can help. Pension funds need to change their priorities to a combination of reasonable return and social benefit.

Whitfield gives a shoutout to CUPE for its work in building coalitions. He writes, “The Canadian Union of Public Employees’ work with the Council of Canadians on water, energy and trade campaigns is a good example of alliance building.”

Global Auction of Public Assets can be ordered online.


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