Saskatchewan Party: Privatization By Stealth

"It’s critically important to remember that the likes of Brad Wall and his Saskatchewan party—just like [Grant] Devine, Stephen Harper, Mike Harris and BC’s own Gordon Campbell—have a visceral contempt for the whole of idea of democratic government. Their assignment as devotees of neo-liberal economics is to dismantle government—or as much of social democratic government as possible and still win elections."

"Gordon Campbell swore up and down he would not privatize BC Rail—an extremely successful Crown corporation. Then he did just that despite a hue and cry from everyone involved—except CN and all the lawyers involved in the sale. The important part of this method is to do it fast and early and hope that people won’t stay angry for four years—a good assumption in this case."

Planet S Magazine
NEWS · OCT 25 2007

Privatization By Stealth

WANT TO SELL THE CROWNS AND NOT GET CAUGHT? HERE’S HOW
by Murray Dobbin

People in Saskatchewan may not have noticed, but the rest of the country has sort of caught up with them when it comes to attitudes towards privatization. They generally don’t like it, in part because they are increasingly suspicious of the huge corporations and their overpaid CEOs who are the only ones who benefit. Saskatchewan has not faced a major threat of big privatizations since the demise of the Grant Devine government. They tried their best—but when we got together and “sold” Devine’s house it started a movement that convinced the NDP to take a stand.

But don’t ever think that these carpetbaggers have given up on handing over public assets to their friends. They’ve just become a little more subtle in doing it. The language has changed—the end result has not. It’s critically important to remember that the likes of Brad Wall and his Saskatchewan party—just like Devine, Stephen Harper, Mike Harris and BC’s own Gordon Campbell—have a visceral contempt for the whole of idea of democratic government. Their assignment as devotees of neo-liberal economics is to dismantle government—or as much of social democratic government as possible and still win elections.

If Mr. Wall is promising not to go on a privatizing spree, take that promise with a bucket of salt. The man probably has his fingers and toes crossed so the promise is meaningless. Here are four ways that these political free marketeers try to get away with selling off the public good, all the while denying they are privatizing.

The first way is to make the process so complex and multi-faceted that people’s heads swim trying to get at the truth. Case in point: BC Hydro. This is the crown jewel of British Columbia’s public companies and has provided BC with the cheapest power of virtually any jurisdiction in North America for decades. But upon coming to power the Liberals implemented a complex scheme that, when taken as a whole, has not only privatized parts of Hydro but has immobilized it as a power company. It is being transformed from a company serving BC citizens (and some very large corporate power users) to one that will end up being a power exporter.

First they contracted about half a dozen company functions to a huge U.S. transnational, Accenture, based in Bermuda. Then they broke the company up into several parts—power generation, power sales and transmission—and deliberately weakened the company in so doing. Then they passed legislation that prohibited BC Hydro from actually producing any new power. From that day on, only private producers could generate new supply—and at prices far higher than Hydro’s. As a result, private power companies have applied for over 400 licenses to construct run-of-the-river power projects. The return to the public for these lucrative power sites is scandalously small, while the prices paid for the power is far beyond what is reasonable for a normal profit.

Once their contracts with BC Hydro have expired they can sell directly to the U.S. (where prices are multiples higher) even if it means BC is short of power—and, adding insult to injury—they have legally binding access to Hydro’s transmission lines, now controlled by a U.S.-dominated transmission authority.

But do the people of BC still own BC Hydro? Sure they do—but it won’t do them much good as they watch their rates double.

Sleight-of-hand number two in the privatizer’s bag of tricks is something called public private partnerships, or P3s. Again, these extremely complex deals appear to leave the facility in question—hospitals, schools, rec centres, highways and bridges—in public hands. Technically, they still operate as public services, based on long term (25-35 years) contracts which set out all the responsibilities of the public service. The winning contractors design, build, finance and operate the facilities—and with higher interest rates than governments pay and a built-in level of profit, the costs skyrocket.

One classic example in BC is the Abbotsford Hospital—the original P3 showpiece of the Campbell government. Construction costs increased from $210 million to $355 million, and the annual operating lease for the private sector contractor more than doubled from $20 million to $41 million. Legal and consultant costs for this deal came in at $24.5 million. The Campbell government now has $5 billion worth of these outrageous giveaways on the books—and the fine folks of BC are stuck with them for at least a generation.

Municipalities which resist these expensive and complex schemes soon find out that their power to do anything is limited: in the biggest P3 in the country, the province forced lower mainland municipalities to construct a $1.5 billion rapid transit line through a P3 (the price is now approaching $2 billion) by threatening to withhold its share of the cost.

Then, of course, there’s the famous example of the massive privatization of health sector jobs—accomplished by the tearing up of legally binding contracts with several health care unions. Thousands of jobs were lost, and people were often hired back by the private contractor for 30-40 per cent lower wages. Fortunately, the Supreme Court of Canada ruled that tearing up these contracts was illegal—and in deciding in favour of the unions, established for the first time that collective bargaining is a right protected by the Charter of Rights and Freedoms. But it doesn’t mean that such jobs can’t still be privatized.

Lastly, if everything else fails, these governments just lie. Gordon Campbell swore up and down he would not privatize BC Rail—an extremely successful Crown corporation. Then he did just that despite a hue and cry from everyone involved—except CN and all the lawyers involved in the sale. The important part of this method is to do it fast and early and hope that people won’t stay angry for four years—a good assumption in this case.

So, free marketer —promise away. Once you have power there’s lots of ways to skin a publicly owned cat.