Privatisation explained

The first pillar of a corporate policy agenda

Image: newbusinessage.com

We’re all reeling from the first year of the government’s agenda. As Parliament gets ready to resume for the new year it would be useful to know what to look for this year. Unfortunately, the language around the legislation often hides its true intent so it’s useful to understand a bit of where the government is coming from and their overall approach to governance and some typical tools they employ.

I and others have characterised the current government as neoliberal. As I dug into in these two posts, what this means is that they prioritise legislation and governance that enables corporations and wealthy interests to entrench their power and increase their profits. This should be the first lens that any legislation or policy should be viewed through. You will find when you look through this lens that there is always a corporate angle. And this angle is never a mistake. It is the primary purpose of the policy agenda.

A neoliberal or corporate policy agenda has three main pillars, and you will find these policy pillars present in all right-wing corporate governments including our current coalition government. They are:

1. Privatisation of the public sector

2. Austerity/cuts to public spending

3. Deregulation of the corporate sector

These three policy pillars are interrelated practical methods to achieving the goal of entrenching corporate power and increasing profits.

In order to try to keep it relatively brief and accessible I’ll focus on privatisation in this post.

What is it?

Privatisation is when something that is public (owned and administered by the government) is transferred to private i.e. corporate, control. For example, if the government owned the electricity grid and infrastructure and decided to either sell the system to a corporation or bring in a corporation to run and administer the system, that is called privatisation. Any time a public good or service is turned over to corporate ownership or control, it has been privatised.

Why do corporations do it?

Profits. There is a massive amount of money to be made in privatisation of public goods and services. Corporations have always been angling to privatise public goods and services and have competed with governments to try to create new markets and avenues for profit. Corporations have set up private markets and tried to take over and profit from public services in all aspects of our lives from birth to death, including

• maternity, infant, child, retiree, and hospice care

• basic dental and healthcare

• food, water, housing, heating, cooling

• electricity, internet

• waste disposal

• education

• transportation, parking

• roads and infrastructure

• mail and package delivery

• life-saving drugs, treatments, and operations

• prisons, incarceration, home confinement

• residential treatment and rehabilitation

• youth and mental health services

• exercise and recreation

In short, if it is part of the human experience, corporations are seeking to privatise it. And they are doing so to be able to extract profits and charge rent for anything they can.¹

How do they do it?

Privatisation takes place in many ways. Usually, corporations have the ear of politicians because they have lobbyists or make campaign contributions. They schedule meetings to discuss corporate needs and try to influence politicians to legislate and govern in their best interests. Many politicians also come from a business background (as our current deodorant king Prime Minister) or have been raised up and trained by ideological lobbying groups to view corporate needs as more important than public good (Nicola Willis and Chris Bishop both worked for business lobbying groups before their time in Parliament and David Seymour and Casey Costello cut their political teeth working for free-market libertarian think tanks).

Corporations also run public propaganda campaigns to reinforce the idea that government is wasteful, inefficient, overly bureaucratic, and cannot deliver services as well or as cheaply as the private sector.

This is a lie. But as I detailed in my last post, corporations have been extremely successful in changing the public perception to be automatically suspicious and distrustful about government efficiency and delivery of services.² Because of this suspicion, governments who want to privatise can do so very easily in the name of “cutting budgets” and “providing good value for money.”

Why is it a problem?

In principle, privatisation might not seem like a bad idea. Why not get the government out of provision of services and let the private sector take care of them? They are motivated to provide good services because otherwise people won’t use them, right?

It’s not that easy. Because corporations have the goal to increase their profits at all costs, they are compromised in their ability to deliver services without an ulterior motive. Their main goal is not to provide the best service for the cheapest price, as is often the case for public goods and services. Their goal is to make the most money off of their provision of services. So they will charge extra for services. They will charge for services and then not deliver (the entire insurance industry is premised on this). They will cut corners to deliver services more cheaply (this can result in safety issues such as the recent doors blowing off the airplanes; in this case safety checks had been falsified to save time and money).

These are not just hypotheticals. Time and again, corporations have shown that they cannot be trusted to deliver crucial services due to the fact that their main goal is to make a profit. This may not seem like a big deal if your Facebook account is clunky or doesn’t work the way you’d like it to. But it is a huge deal when your healthcare system is run by corporations who would rather not spend to equip hospitals or staff with the needed infrastructure or training because it would hurt their bottom line. Or when your privatised energy grid fails in the middle of a freezing coldsnap and is not fit for purpose. It’s literally a matter of life and death for some people. Public services are usually provided cheaply if not for free (paid for by taxes). When these services are privatised, they can cost so much that many people cannot afford necessary care and services.

Another reason why privatisations hurt is because public goods and services are provided by people. When these services are privatised, many people lose their jobs. In fact, cuts to public services, like those being implemented by the current government, are often used as a pretext for later privatisations.

What to look for?

How can we tell when the government wants to privatise or is making plans to?

Governments are sneaky when they want to privatise. They talk about it in terms of “choice” and “value for money”. They will point to budget deficits and say that the government doesn’t have the money to provide services. They will conduct audits that return a result indicating a government department or service is not fit for purpose or is wasting money. They will point to problems that they have caused because they have underfunded government services as a reason they need to be privatised.

All of these things have already happened in the government’s first year. David Seymour justified his charter schools (privatised schools) on the basis of more choice, lifting student achievement, and that the public schools (chronically underfunded) were not fit for purpose. Luxon and Reti pointed to budget deficits at Health New Zealand (deficits that turned out to be a lie) as a reason to restructure the service, bringing in Lester Levy. Levy and Reti are soon to announce a “reset” at Health NZ, which will likely involve privatisation or at the very least “public/private partnerships.” Chris Bishop commissioned an “independent” audit from Bill English which found that the public housing authority was “underperforming and not financially viable.” The conclusions of this review were challenged by the board. The government’s new plans for Three Waters have also been labeled “de-facto privatisation.”

All of the signs and rhetoric we would expect are there. The government plans to privatise huge portions of the public sector and they are moving fast. It remains to be seen if enough of us can make a big enough fuss that they back off of some of their most drastic privatisation plans.

1. See Donald Cohen and Allen Mikaelian, The Privatization of Everything: How the Plunder of Public Goods Transformed America and How We Can Fight Back.

2. Corporations will also take advantage of natural or other disasters to move in and privatise services. Often people and governments are so shocked and desperate for help in the aftermath of a disaster that offers of assistance by corporations seem like a godsend. In reality, corporations are usually just trying to siphon off and control more of the marketplace. See Naomi Klein, The Shock Doctrine, for detailed discussion and examples. Many, if not all of the foreign policy decisions made by the US government are made with corporations in mind. Many governments have been overthrown or meddled with because they threatened corporate interests.