The financial collapse is ammunition in the fight against privatization, but citizens must protect public services from being sold by cash-strapped governments, says Maude Barlow.
Speaking at a CUPE New Brunswick summit on public private partnerships, the Council of Canadians’ national chairperson said the market failure exposes fundamental flaws in a global economic order that includes privatization as one of its main pillars.
“The system has been profoundly rocked at its core,” she told a public meeting of CUPE and its allies in Saint John. “This is a moment. The ideas are up for grabs and we’re going to have to jump right in there.”
The financial collapse demolishes the argument that the private sector is better at managing risk, as governments come to the rescue of the financial sector with sweeping guarantees and bailouts. Private sector borrowing costs have shot up, making P3s even more expensive and increasing the advantage of public financing.
Both she and British P3 expert Dexter Whitfield said progressive movements around the world must seize the chance to push public solutions for infrastructure and services. “If ever there was a time to trash P3s, this is it,” said Whitfield, who directs the European Services Strategy Unit, a pro-public services think tank.
He predicted the British public sector would come under intense pressure, as a possible recession leads to lower tax revenues, higher costs, cutbacks and increased private sector demands for subsidies.
“Some P3 contracts may go belly up,” he said. “Companies are having difficulty getting money, not just the banks.” The credit crunch also creates pressure to sell or lease existing services and infrastructure that have cash flow from tolls or other user fees, he said.
In his speech to the summit, CUPE national president Paul Moist drew on a recent British example from the long-term care sector, where private equity firms borrowed to the hilt based on over-valued property prices, and now can’t get their loans renewed, putting services at risk and opening the door for public bailout.
In spite of the worsening case for privatization, Barlow warned that desperation may still drive communities to privatize. She says she’s seen several American municipalities sell their water facilities in the past few weeks, arguing they were broke and could no longer afford to operate the service. “It’s very possible there will be a fire sale of utilities by cash-strapped municipalities around the world,” she said.
As their investment opportunities dwindle, corporations will step up their pursuit of P3s, which have long-term, secure revenue and profits.
Saint John Mayor Ivan Court, who moderated the session, said the situation is “a wakeup call” for Canadian municipalities. Court, who was elected last May on a platform that rejected a P3 for the city’s water treatment system, said municipalities can’t tackle the $123 billion infrastructure deficit alone. “The real fight is to get more money from upper levels of government,” he said.
The bailout in America and parts of Europe is “money that might have been earmarked for infrastructure, health care, education and other public services we all care about,” said Barlow. “The money is there the moment the powers that be decide it’s going to be there.” Barlow’s call to action focused on the global water crisis and connected with the fight to keep water public in Saint John.
The evening event ended the first day of the summit, titled ‘Don’t fall into the P3 trap’. The event has drawn 280 delegates from across the province and the country – including a busload of CUPE activists from PEI, as well as staff and activists from Ontario, Quebec, Nova Scotia, Manitoba and British Columbia.
Daytime presentations and workshops highlighted the lessons learned from P3 schemes in Britain, New Brunswick and British Columbia. Delegates also learned about the power of working together through the story of Quebec water coalition Eau Secours.