Sunday, August 20, 2017

Privatising governments are out of touch

A recent report from the Transnational Institute on the transfer of public assets into the private sector has revealed what many consumers around the world already know — four decades of privatisation have generally not brought anything like the golden promise of cheaper, more efficient services.

Instead they have often produced a litany of run-down operations, failed infrastructure, corner cutting and profit and shareholder value maximisation over the needs of the consumer.

Such is the extent of the problem that in Europe there is a major shift towards wresting privately-run utilities back into public ownership. In Germany alone there are hundreds of municipalities deciding not to renew private company contracts; France is not far behind.

In the United Kingdom, Labour leader Jeremy Corbyn struck a chord with the electorate when he promised to re-nationalise the privately run rail network. Years of ownership by various companies have seen the price of travel rise in direct proportion to the decline in services provided.

In Australia, the reputation of the four major banking companies has never been lower, to the point where the Government is casting around for new players in the market in the hope that competition might placate a population thoroughly fed up with high charges and indifferent services.

Professor at the School of Economics at the University of Queensland John Quiggin summed up the mood when he said that most Australians now firmly believed that privatisation was a policy that had consistently failed.

“Yet it is still remorselessly pushed by the political elite. It is little surprise that voters are turning to populism in response,” Professor Quiggin said.

He cites the example of “the comprehensive failure of vocational education privatisation…yet despite this, the push for privatisation has gone on…for-profit education in the United States has been a disaster area”.

The UK’s Corbyn nearly caused the biggest election upset in modern times with a platform that contained the re-nationalisation of the railways and water industries. Shadow Chancellor of the Exchequer John McDonnell pointed out that three decades of water utilities in private hands had led to ownership by a handful of foreign investors, many based in overseas tax havens. 

“Meanwhile, prices have increased by 40 per cent and over a quarter of the amount consumers pay on bills goes towards servicing debt interest and paying out dividends,” McDonnell said

In Indonesia, the courts have intervened to annul water privatisation contracts in the capital, Jakarta, finding that the public-private partnerships had been negligent in fulfilling the human right to water for the city’s residents.

For decades we have been fed the mantra that the private sector, existing in the “real world” where competition mandated management efficiency, would do a better job of running public assets than lazy, uncommitted and incompetent public servants. Over time that rationale has resulted in privately run prisons, security systems, telecommunications networks and the management of resources.

If the chaos and misery spread by the global financial crisis was not warning enough of the effects of an out-of-control private sector, surely the Government of US President Donald Trump, a businessman with no experience in public administration, is the clincher.

While the private sector has a role to play — and in some areas it is just too complicated to return to public ownership — a rebalancing of the privatisation craze is necessary if we have any hope of moving towards a more just, sustainable future.

Friday, August 11, 2017

Public servants are Patel’s latest target

Priti Patel, the woman who is waiting for British Prime Minister Theresa May to make one more mistake so she can jump into the breach and drag the Conservative Party even further to the right, has been targeting the country’s public servants in her latest outburst.

Government workers’ pay rates are “crazy, wrong and out of step with pay for comparable posts in the private sector” she is claimed to have said (without actually defining what these ‘comparable posts’ might be) and “must be restrained”.

What really seems to irk her is that many senior public servants earn more than she and her Ministerial colleagues. Patel is one of those Members of Parliament, and there have been many down the years, who believe that Government Ministers should automatically be better paid than the people to whom they give orders.

In fact, any rational comparison between the work even a mid-range public servant has to do, compared with that of a Minister, would suggest otherwise.

When a Treasurer, produces a Budget in Parliament, has he sat down and worked out all the figures, making the policies proposed at least halfway affordable? Is Ms Patel as International Development Secretary, across every item of aid that goes to every country that her Department supports?

When Ms Patel sits in her office and signs the cheques, or rushes off to some donor country for photo opportunities, it is the workers in her department who have decided on the number of water purifiers and sacks of rice that can be afforded and from whom they can be purchased.

It is they who will decide what level of security she will need on her trips overseas and who provides it. They will even write the speeches she delivers to the grateful aid recipients.

In the past Ministers have always come back with the claim that they are ultimately responsible, and if public servants foul up it is the Minister that takes the hit. Yet how true is that in the modern political climate? How many Ministers actually resign these days over mistakes others have committed in their departments? Wriggling off the hook is a skill well practiced and honed to a fine art in today’s Government.

Of course Patel, who learned her politics at the knee of Margaret Thatcher, cannot help but hate public servants. It is in her DNA that they are a drain on the taxpayer, unproductive, lazy, their jobs protected from the ‘real world’ and so on.

She has accused top bureaucrats of having been too close to companies that have been awarded lucrative foreign aid contracts. This from a woman who has constantly advocated on behalf of the tobacco and alcohol industries and has sought to have bans that discourage smoking overturned.

One wonders how Patel would cope for one day without the support of the workers in her department. How her beloved Brexit would cope without hard working public servants trying to unravel the mess that her incompetent Front Bench colleagues are creating daily.

She should do no more than listen to the restrained response to her ranting from a Government spokesman: “The Civil Service deals with varied and complex issues and needs to attract, recruit and retain highly skilled individuals, which means it is sometimes appropriate to pay higher salaries.”

Sunday, August 6, 2017

The price of forgiveness

There are still good people in government — I have to believe that because the alternative would be to give up in disgust, joining the perpetual cynics and those who simply do not care anymore.

I have reported on my share of egotists, self-servers, blaggards and downright incompetents; of democratically elected presidents who behave like mafia chiefs; of leaders who pepper their speeches with the invective of the gutter, but perhaps worst of all, the ideologues prepared to go to any lengths to twist society into their view of the world, no matter the damage they do or the people they hurt.

A case in point is the current controversy surrounding the United States Student Loan Forgiveness Program. Set up towards the end of the George W. Bush Administration and continued through the Obama years, it offered university graduates the opportunity to work in low-paying public service positions — including policing, teaching, legal aid and social work — or for not-for-profit organisations.

If they completed 10 years of that service, they would be relieved of the balance of their loan taken out in order to afford a tertiary education.

By European standards the program was not generous — the inductees would still have to make repayments while they were working in their job, but at a rate that reflected their low pay, and at the end of the program the outstanding amount of the loan would be ‘forgiven’.

At least that was what the roughly half-million graduates who had enrolled in the program since it was established in 2007 believed. What the paperwork from the Department of Education they signed said, and what they continued to believe as they toiled away in jobs far below the levels that their degrees should have given them.

But now, just as the initial inductees are completing their 10 years of service, the Department appears ready to renege on the deal, claiming that the contractor originally hired to administer the program “could not be relied on” to give assurances that loans would be forgiven.

The Department said the contractor had made “occasional errors”, in its relationship with those in the program, but claimed that these errors had now been corrected and that everyone should now know where they stood.

According the Department, this means that inductees have to complete the program — and provide confirmation of their monthly repayments during the 10 years — before the Department would consider their eligibility for loan forgiveness.  

This last minute change of course has sent a shudder of apprehension through the graduates who are working their way through the program. As the President of the American Bar Association, Linda Klein points out, they took jobs and put their ambitions on hold based on the information they accepted in good faith from the Department. Now it seems they could be paying a steep price for the Department’s mistakes.

But is this a simple mistake, or really an excuse to ditch a program that is anathema to the current Administration in Washington? The Department is headed by Betsy DeVos, a super-rich businesswomen who has made no secret of the fact she has used her wealth to buy influence within the ruling Republican Party to “foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues…we expect a return on our investment”.

Ms DeVos, whose nomination for the position was fiercely contested by Democrats in Congress, is known to be determined to remake American education in her preferred image — and has an intense dislike for the loan forgiveness program. While a direct assault on it would be met by a flood of lawsuits, the current development may be the start of a search for ways of killing it off by other means.

The Student Loan Forgiveness program was not only a way of helping students reduce their debts. It encouraged talented young people into areas where they might never have considered, helping people with their social and medical problems, beefing up law enforcement, teaching in rural and remote areas.

If they eventually move on, their lives and attitudes would still be coloured by the experience — and if even a tiny fraction considered the work worthwhile enough to devote the rest of their career to it, then society would be the beneficiary.

But the scheme does not accord with the hard line thinking of Ms DeVos and many other conservative Republicans. The bottom line is too fuzzy with liberal values and the sums do not add up.