CUPE Policy Statement on Public-private partnerships
Partnerships for Patronage and Profits
When youre under attack, you fight back. And were under attack from privatization in disguise known as P3s or PPPs something we recognized at our last national convention as a new road to privatization.
But its a dangerous road, filled with potholes that will swallow up jobs whole. Those who do make it home will find themselves paying more in user fees for their water, their school, their hospital nothing is safe from the attack of the Killer Ps.
Thats why CUPE is fighting back, showing that P3s are not the solution to problems in the public sector. Its simple math funding cutbacks cant be solved by giving massive profits to large corporations. P3s dont save money, either, with extravagant leases and secret contracts that only benefit shareholders, leaving communities and workers high and dry.
Through media events as well as research, organizing and membership mobilization, weve put CUPE on the map as the major opposition to this new form of privatization. Ask former New Brunswick Premier Frank McKenna what he thinks after we crashed his press conference in Toronto held to promote PPPs. Or the Canadian Council on Public-Private Partnerships after we out-organized them at a recent convention in Halifax.
Weve devoted considerable time and resources to understanding whats involved in PPPs, whats wrong with them and whats at stake. Thats quite an achievement given were dealing with secret deals and private contracts. Our expertise came not a moment too soon.
Through our campaign, weve been proving that public works, and that P3s dont!
In Prince Edward Island, weve caused the Tory government to blink twice once on privatizing waste programs and in cancelling plans to build a P3 hospital. In Alberta, even Ralph Klein backed down in the face of CUPE-led opposition to private hospitals specifically citing our work as important to stopping the project. In New Brunswick, we made a P3 highway a major issue and won a promise from the new government to remove tolls.
But with every fire we put out, another flares up. Wherever we turn, our jobs and the services we provide are up for grabs. Nothing, absolutely nothing, is safe from the P3 assault water, schools, hospitals, roads, utilities, arenas; and health, municipal and social services are all in danger. And once theyre gone, we will never be able to get them back.
They call them partnerships. We call them what they are one-sided deals that reap profits for the private corporations at the publics expense.
We dont say the private sector has no role in public services and infrastructure. Of course it does. In most provinces the private sector has been involved historically in designing and building new water treatment plants, new schools and hospitals. But theres a big difference between building a water plant and deciding whether someones too poor to receive the water. The private sector builds cars, too, but it doesnt decide where we drive them.
But thats exactly the type of future these huge corporations want to build. They decide the price. They decide when a school can be used. They decide where roads and other infrastructure get built. And the public picks up whatever costs the corporation decides to levy to keep its millionaire CEO happy.
Its a frightening future, but one that governments are helping to assure. Despite sitting on multi-billion dollar surpluses, governments are listening more to the National Post than they are to Canadians. Canadians want better services and public services, but Conrad Black and his papers say we want huge tax cuts for the wealthy and favour private health care. Increasingly, governments dont think theres a choice which is why CUPE must increase our campaign to fight back.
P3s are privatization. Period. They can call it whatever they want and try to convince Canadians that its not privatization, but as long as we fight back hard and expose P3s for what they really are, Canadians will be on our side. After all, if Canadians werent against privatization, then P3 promoters wouldnt try and hide privatization behind fancy terms.
P3s dont deliver the goods
The simple truth is that P3s dont live up to their promises. They dont cut costs they saddle governments with huge, long-term lease agreements. A dollar spent is a dollar spent on debt or on lease payments. It is not a victory for governments to save two dollars on debt but spend three dollars on lease payments, but this is precisely what these P3 schemes are all about.
P3s dont cut costs, either. They do lower wages profits have to come from somewhere but overall costs rise because the private sector cant borrow money as cheaply as the public sector can. CUPE commissioned economist John Loxley to examine some P3 schemes and we can prove that governments spend more by contracting out the financing. No Canadian would buy a car on their Visa if they could get a bank loan for a lower interest rate, but this is precisely what these P3 schemes are all about.
And P3s dont help governments reduce taxes because they inevitably lead to increased user fees. Is it better to save one dollar in tax and pay two dollars in user fees? Of course not. Yet this is precisely what these P3 schemes are all about.
In fact, the more people know about P3s, the more they dont like them. Two provincial auditors-general people whose job it is to examine government spending have said P3s cost more. Even a Tory premier rejected a P3 arrangement for a hospital because the numbers just didnt add up. Our challenge is to keep speaking out about P3s because the more people know, the less they like them.
P3s use our money to sell off our services
If basic common sense economics is being turned on its head where a dollar spent on leases isnt the same as a dollar spent on debt and a dollar spent on user fees doesnt count at all theres a perverse twist to the P3 fad. Workers money is being used to hurt workers.
When privatization hits public services, three things happen. The first is that good jobs leave the community through contracting out, layoffs or a steady reduction in the workforce. At the same time, public services get worse, meaning working families receive poorer education and health care vital tools in creating healthy communities. And user fees go up, which hurt working people and the poor the most because a $10 road toll costs more to someone making $25,000 than it does to a millionaire.
So when workers money is used to directly harm workers, something has to change.
When Hamiltons water treatment plant was privatized a dismal failure that included huge staff cuts the Ontario teachers pension fund helped fund the privatization. When Nova Scotia signed a contract to build 55 privately-owned schools, funding from the municipal and school board sector pension plan in Ontario was used by one of the private consortia involved.
Workers dont want their pension funds used in child labour. And workers dont want their pension funds used to inflict harm on other workers. Its our money and CUPE must say loudly and clearly that its not to be used to privatize schools, water, nursing homes, electrical utilities or hospitals. Not now. Not ever.
Our strategy must be two-pronged: we need to work harder than ever to get control over our pension fund investments. And, we need to be clear about how we want our pension funds to be invested.
Right now we dont control our pension plans. Gaining control means fighting to get at least 50 per cent of the seats on the boards that govern our plans. It also means working hard to ensure that our pension funds are being invested in ways that promote the long-term and broad interests of our members.
That doesnt mean there isnt a role for pension plans in helping to finance government services and public works projects. Quite the opposite, in fact. Theres nothing wrong with pension funds being lent to governments, through bonds, to help governments build public infrastructure and services. These loans have two advantages: they provide a good rate of return for pension plan members, and help the government borrow money at reasonable rates so they dont have to turn to more expensive sources of money in the private sector.
The road ahead with no tolls
Since the launch of CUPEs first Annual Report on Privatization and our national Public Works! campaign, weve caused Canadians and opinion leaders to question the fad of privatization. But were up against billion-dollar corporations and the Conrad Blacks of this world, so the road ahead is filled with challenges.
At our last convention, CUPE members recognized the threat P3s presented to our jobs and the services we provide. Members clearly said they wanted to fight P3 privatization and CUPE has.
And were not about to give up this fight. We have them on the run already and were just getting started. Our fight to protect public services from P3 privatization will include:
- Continuing to expose the P3 myths through our national Public Works! campaign and our local and regional campaigns.
- Helping locals facing P3 privatization inform their communities of the real dangers of these expensive schemes.
- Continuing to educate members and staff on P3s, using expert analysis of economists and popular, easy-to-use materials.
- Building on the success of the 1999 Annual Report on Privatization with the 2000 Annual Report on Privatization, which will provide more in-depth information we can use to fight back against P3s.
- We will continue to work with decision-makers in government, as with our lobby campaign on water infrastructure, to promote real alternatives to P3 privatization. Our pension investment plan is just such an example using modern means to address modern challenges.
- We will continue to work with people who use and rely upon public services to establish a broad-based coalition to fight P3 privatization wherever it threatens.
- We will call for fair and honest reporting of P3s, including lobbying auditors-general and accounting organizations to be stringent in how lease payments are reported, thus removing any incentive for government to hide debt.
- We will develop an economic analysis of the value of investing in public services, including proposals for specific projects.
We will work with the Canadian Labour Congress and other labour groups to promote a better understanding of P3s throughout the labour movement. CUPE has convinced the CLC to sponsor a major national conference on privatization as a forum to raise our concerns about P3s. Key to our work in this area is action to make sure workers pension funds arent used to attack other workers and public services.
CUPE will step up its work to understand the role that pension fund monies play in P3s including the role of tax-exempt pension corporations which are being used as the actual owners of some P3 assets (such as Nova Scotia schools).
Weve made an excellent start in Ontario already with CUPE Ontarios campaign to win joint control of OMERS (one of Canadas largest pension plans) and to stop OMERS investments in P3 schools and other privatization initiatives. But this is only the beginning.
In order to achieve all of our objectives, we commit to:
- Intensifying our efforts to gain meaningful, joint control over our pension funds.
- Developing accountability guidelines for pension trustees.
- Providing our pension trustees, activists, and those who bargain over pensions with direction as to how they can stop their pension funds from being used in P3 privatization.
- Working with the CLC to make fighting P3s and promoting public infrastructure financing a priority issue for all unions.
- Incorporating our analysis of P3s and our alternative prescriptions into the annual Alternative Federal Budget.
- Busting the myth that there is no choice but privatization. We will demonstrate to governments that funds can be raised through pension funds so public services remain in public hands.