Canadas Public Services in Danger
Public services in Canada are under increasing pressure. Funding has been pared to the bone and beyond. Demands continue to grow while programs and staffing have been cut.
In many instances, these decisions have been motivated by short-term concerns to avert a crisis, or to create one. But the long-term consequences are enormous. The mounting human cost. The impact on jobs and the economy. The damage to the environment. The growing deficit in basic infrastructure. The erosion of public confidence in our collective capacity to direct our future.
Through the 90s, the governments of Canada have focused their energies on reducing their deficits. But while the cause of the deficits was high interest rates, the preferred solution was to download costs, cut public services or to hand them over to the private sector.
At the end of the decade, deficits have been largely eliminated. But the drive to privatize has not abated. Fanned by a burgeoning industry of conflict-of-interest-laden consultants, privatization is being sold as the solution to any and every problem. Spin doctors have left us dizzy with their mantra that the market can do it better, supported by media that uncritically applaud any move to privatize.
“Its a global phenomenon.” “The wave of the future.” “The only option.” We are told that essential collective resources such as water are commodities to be traded and sold. Health care and education will be improved by applying market principles. Social services will benefit from competition. Community services will be more efficient if delivered for profit.
To support these assertions, the experience of Britain, New Zealand and other countries is often cited. But the record has been grossly distorted. While privatization has been immensely profitable for corporations and their executives, it has been a disaster for consumers and taxpayers, as costs skyrocket and service deteriorates. User fees for water services in most parts of Britain have doubled over the past decade while rationing and water shortages have become all too common. In Auckland, New Zealand the central business district was left in the dark for 66 days last year as the corporation set up to deliver power failed to do so.
Whether because we are aware of the facts or wary of the pitch, Canadians are deeply skeptical about the promised benefits of privatization. Many have seen first hand the results of market-based medicine in the United States and the consequences when profits are wrung from education, community and social services. Women in particular and families with lower incomes or special needs understand the threat that two-tier services represents in terms of quality and access.
Canadians are also clear that privatized services have a negative impact on jobs and our local economies. Less staff earning lower wages with fewer benefits undermines the quality of service delivery, but also undermines the local pool of customers and taxpayers. Especially outside of metropolitan centres, public sector incomes play a crucial role in the local economy.
Permanent, full-time employment is replaced by precarious contracts and part-time work, consultants and casuals, unsupervised volunteers and family members primarily women.
Responsiveness is sacrificed to economies of scale, so local services become regionalized or centralized. Local jobs are replaced by head office jobs. Local suppliers are replaced by metropolitan or international sources.
For all of the hype about reducing costs and improving service, Canadians are concerned that the drive to maximize profits will inevitably lead to cutting corners, endangering the health and safety of staff and the community and increasing the risk of serious damage to the environment.
We are also wary that privatization will result in higher user fees and higher taxes. Most Canadians acknowledge we are receiving good value for our tax dollar, so we understand if profits are to be made from these services, the price is likely to rise. We know that most often services have been sold or contracted out to transnational corporations that are assured a market, a monopoly and a return on their investment. While profitable enterprises pay their investors a handsome return, ventures that fail are bailed out by the taxpayer.
Many of these schemes amount to a massive subsidy, with the public sector which can borrow money more cheaply than private investors underwriting the capital cost and assuming the risk. In other cases, where the private investor has provided the capital funds, escalating lease payments constitute a much greater burden on the public purse. And in both instances, corporate tax breaks and concessions mean that individual taxpayers are destined to bear an unfair share of the cost.
And when there is a problem? Good luck. Accountability becomes obscured, leaving government and corporations passing the buck. Despite the best efforts of consumer advocates and auditors general, many of these schemes have been worked out in backrooms and corporate records are not subject to public scrutiny. Whether offering a suggestion for improving service or launching a liability suit for major damages, the blurring of responsibilities between the public and private sectors does not serve the public interest.
It is difficult to estimate the extent of privatization in Canada. No reliable data exist at the national or provincial level. And the nature of privatization is complex.
There has always been some private sector participation in delivering public services, usually in constructing public facilities or supplying goods and highly specialized services. Universities and hospitals operate at arms length, though their funding is largely public and they operate for the most part on a not-for-profit basis. In the social service sector and in long-term care, there has always been a mix of community, public sector and for-profit providers.
But it is clear that the pressure to privatize has increased in recent years. And that an increasing number and range of public services are being delivered by corporations for profit.
As well, privatization has other guises. It includes increasing user fees where costs are privatized and voucher systems where delivery is privatized. As well, we see increasing examples of “self-managed care”, where families are expected to have the time, the skills and the financial resources to take on responsibilities that had been vested in the public sector.
Mindful of public resistance, corporations have tried to diminish and deflect opposition by promoting “public private partnerships”. For the most part, these joint ventures can be equated with privatization by stages, with the added dimension that the public sector retains all the risk while the corporations accrue the benefits.
As well, corporations have targeted sectors with less public visibility or where the impact of privatization on quality is less apparent. Aware that Canadians would resist any move to privatize the work of doctors, teachers or public utilities, corporations have focused first on cleaning, food services, garbage collection and information technology. Yet the impact on quality, access and safety of privatizing these services can be enormous. And the spiraling costs and erosion of accountability can be equally dangerous.
Privatization creates an increased reliance on the market to sell services for profit that had been provided by the public sector in the public interest. But it is only one dimension of a broader dynamic in which the role of the state and the power of governments are being weakened.
Deregulation has limited the scope of government in protecting our collective interests. Meanwhile, the capacity to defend standards has been hobbled by cuts or the wholesale contracting out of enforcement.
But more dangerous still, agreements on trade and investment are severely constraining the ability of governments to distinguish between community-based, non-profit providers and multinational corporations operating for profit. As well, these agreements will tie the hands of future governments, limiting their scope to innovate, expanding the public sector into new areas in response to public demand.
Canadians value public services. We recognize their central role in meeting our essential needs as individuals and as families. But equally important, we understand their singular importance in building community and a collective sense of public purpose, often in defiance of our geography and social history.
Historically, governments and an active public sector have provided crucial leadership in building the infrastructure for economic development and social security, helping Canada to adapt to changing global circumstances. In turn, this public investment has supported a standard of living of health and education and opportunity that is the envy of the world.
More recently, the retreat of governments and the erosion of public services have severely undermined our capacity to foster innovation, assure equity and promote social, economic and environmental health. We see this each day as we walk through our cities, visit communities dependent on farming, fishing or forestry, drop in to a youth centre or a homeless shelter, visit an Aboriginal community or a food bank. We see this, too, when we examine the state of Canadas infrastructure.
Turning over control of essential community services to the for-profit sector will only accelerate this decline, promoting two-tier services and excluding an ever-growing number of Canadians from full participation in the daily life of our country.
On the eve of the next millennium, Canada must make a significant investment in our collective future, strengthening our institutions of public purpose and assuring public delivery of quality public services.