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Secure profits, insecure services

In the economics of privatization, efficient doesnt mean effective. With corporations seeking ever-larger profits, quality, access and safety are often the first corners cut as services pass from public to private hands. The social, human and environmental consequences are far-reaching. But in a management mindset that quantifies everything, such immeasurable costs dont always make it into the equation.

Paying low wages helps private companies improve their bottom line. But it often leads to high turnover and low motivation among workers, threatening patients quality of care. For example, non-unionized workers employed by private, for-profit home care agencies have turnover rates as high as 50 per cent in one study of British Columbia workers, disrupting continuity and undermining quality. Rapid turnover leaves already-vulnerable elderly, sick and disabled people open to abuse and manipulation.

Private for-profit group homes and treatment facilities pose a significant threat to Ontario residents, who may soon find their community care taken over by U.S. corporate giant Res-Care, which is positioning itself to become the provinces first for-profit provider of services for troubled youth and people with developmental disabilities. Res-Cares U.S. track record includes a completely non-unionized workforce and complaints of lax security, poor supervision and unsafe conditions at some facilities. In one recent case, a Houston home run by a Res-Care subsidiary was temporarily shut down after the death of a mentally disabled resident who reportedly lay in a pool of bleach for several hours because she failed to respond to staff yelling at her to get up. The woman, who sustained burns to 40 per cent of her body, was reportedly not bathed for three days and received inadequate medical attention. Non-profit social services founded on decades of community involvement and caring may soon be swallowed up in Res-Cares drive to expand into the Canadian market.

Government retreat from environmental regulation and inspection makes the handover of public services all the more dangerous. Relying on industries to self-regulate may well mean no regulation at all. Ontarios Ministry of the Environment is investigating allegations corporate giant Philip Services is dumping toxic sludge destined for recycling directly into a Hamilton-area landfill site designed for non-hazardous materials. The beleaguered corporation, also facing charges of misrepresenting and mismanaging its finances, has been convicted in Ontario, QuTbec and Alberta on various counts of storing, transporting and illegally dumping hazardous materials. Philip, which operates Hamilton-Wentworths water and sewage treatment, has attempted to dodge responsibility for a 1996 raw sewage spill that sent 180 million litres of sewage into the Hamilton harbour. Since taking over plant operations, Philip has cut staff by more than 35 per cent, after promising to create 100 new jobs when the operations were privatized. Entrusting water and sewage treatment and hazardous waste management to unaccountable and often unstable private companies is a high-stakes gamble with community health and safety.

Privately owned and operated highways also pose significant safety threats. In order to reduce construction costs, the builders of Ontarios private toll highway engaged in a process of value engineering. But the apparent savings translated into the delayed construction of three interchanges and the cancellation of three others. The Association of Professional Engineers of Ontario also found the highway lacking in necessary safety upgrades such as crash barrels rumble strips, proper signage and safe medians. New Brunswicks toll highway, a privatized stretch of the Trans-Canada Highway, is also coming under fire in the community of New Maryland. To avoid the cost of a cloverleaf, drivers will be required to make a left hand turn against or across oncoming traffic at the intersection of the New Maryland highway and the newly-constructed four-lane stretch of Trans-Canada.

Social assistance restructuring in Ontario is seen by many as preparation for the eventual privatization of welfare provision. Engineered by multinational Andersen Consulting, the restructuring involves limiting or eliminating human contact with welfare recipients. The number of points where people can access welfare has already dropped drastically from 167 to 47, leaving residents of rural communities isolated. The governments plans include preliminary financial assessments the first point of contact with the welfare system by phone. Andersen-guided restructuring of New Brunswicks social assistance led to the elimination of a quarter of the welfare administration workforce, with the remaining caseworkers told to spend no more than 4.5 minutes per month talking with each client. Welfare recipients were met with a computerized phone system and voice mail in place of their caseworker.

This move to the virtual provision of social assistance will eliminate many good jobs and isolate already-vulnerable members of society, abandoning many to the streets. Andersens reform of Spains welfare system introduced multi-media kiosks as access points for health and welfare services, leaving those unfamiliar with the technology without service. In both New Brunswick and Ontario, Andersens compensation is in part based on projected savings from reducing administration costs and caseloads. Undertaking to reduce caseloads without any holistic plan including affordable housing, training, employment and child care means a growing number of citizens will slip through the cracks and end up in even more desperate circumstances, with escalating social and economic costs.

Ontarios social assistance restructuring includes the introduction of compulsory work for welfare. Forcing welfare recipients to work will create an increased demand for childcare. Yet workfare participants will have access only to unlicensed childcare, thus encouraging the use of privately-run unregulated care a poor alternative to not-for-profit, regulated childcare.

The rush to privatization throws up significant roadblocks to the creation and expansion of not-for-profit childcare services. In addition to the heavy promotion of unregulated childcare, privatization can mean putting public funds into the hands of individuals through vouchers, instead of investing in the system as a whole. And privatization fosters the growing commercialization of the sector through everything from individual commercial operators to childcare giant Kindercare, which trades on the New York Stock Exchange.

A range of studies have found non-profit childcare provides superior care and quality service. A 1990 study of Calgary childcare services, the first Canadian study to directly assess the quality of childcare, found non-profit centres consistently scored higher on quality of care. The study also found parents more likely to be involved in non-profit centres, while for-profit centres were less stable, with more closing or regularly changing administration. Staff at not-for-profit centres had better wages and benefits, were more likely to have early childhood education diplomas and to have worked in one centre for at least five years. They also had more input into decision-making. Commercial for-profit centres charged higher fees than their not-for-profit counterparts. The report concluded that differences in quality could be directly attributed to the differences in staff, structure and methods of operation at non-profit and for-profit centres.

Food services are one area where, in the health sector particularly, privatization and contracting out inevitably affects the quality of meals. In one recent QuTbec example, American multinational Versabec took over food services at a Shawinigan seniors home. Not only did food quality plummet, the cost per patient soared. Workers had proven that keeping the kitchen in-house would have meant three nutritious meals a day at nearly a dollar less per day, per patient. Good diet, an important part of the healing process, is being sacrificed at health care institutions across the country.

With increased privatization comes an increased reliance on user fees which perpetuates inequality. A recent Canadian Council on Social Development study shows children from high-income families are three times more likely to take part in extracurricular learning opportunities than lower-income children. The same study found less than half of low-income families spent money on user fees for recreational activities, compared with 72 per cent of high-income families. New or higher user fees are common when a service is privatized. After Winnipeg City Council handed off several community arenas last spring, young hockey players faced fee hikes almost immediately. Its a similar story at privatized pools, arenas and other community hubs across the country. For low-income families the message is clear: access denied.

For Canadians whose first language is neither English nor French, access to services can also decline as privatizers displace public agencies. In major centres, it is not uncommon for municipal authorities, school boards and other public bodies to offer services in a wide range of languages, responding to the needs of their local residents. Private corporations are less likely to assure first-language services to linguistic communities and new Canadians. Official bilingualism is also threatened, with the private sector exempt from federal legislation mandating services in English and French.

In case after case, some of the most-valued aspects of public services are given short shrift when weighing the benefits of public delivery. Yet in the end these factors dwarf any savings realized from privatization. Safety, quality and accessibility, distinguishing features of Canadas public services, must take priority when considering cost-effectiveness and value for money.