"Privatizing the Public: Whose Agenda? At What Cost? Away back in the early 1980s when I first went to university we had as required reading a text titled "In The Public Interest". It was assumed that we knew what the 'public interest' was. Governments placed great store in representing the interests of the "ordinary bloke" and acting for the 'common good'. Indeed, to act in the public interest was the pinnacle of political achievement.
Public utilities such as Health, Education, Power generation, and presumably local affairs were organised around the 'common good'. It was part of the philosophy of the day that since these services were organised for the common good of all citizens they were too important to be left to the foibles of the 'free' market. To do so was nothing short of heresy. Then in 1984 all that began to change. The "borrow and hope" policies of the Muldoon era were just getting the country further and further into debt. The medicine of "mini-budgets" and "fine-tuning" was just making the patient ever sicker and it all had to change, so we were told, if prosperity was ever to be restored. The heavily-regulated capitalism we had all become used to under Muldoon was producing more and more of what the world wanted less and less. New Zealand was sinking under vast seas of subsidies as the public debt grew to massive levels while an over subsidised farming sector had become inefficient and wasteful. It all had to stop as New Zealand slipped from about 5th in the world to something like 25th. The answer so the gurus of the time, led by Roger Douglas told us, was to liberalise everything from health to education to local affairs and let "the market" sort it all out. This implies that there is an in-built efficiency in the private sector and that if we privatise much of what used to be called "public utilities", which suposedly exist solely for the "common good", for example local government, we will end up with a more efficient and cost-effective system. If this is so, why do my rates keep climbing just as fast today as they did then? The trouble, as I see it, is that the wheel has turned full-circle. Whereas in the bad old days back in the 1970s and 1980s there may have been an over reliance on subsidies to keep the good ship Aotearoa afloat, today we seem to have gone too much the other way and placed everything, including public utilities, in the hands of private business. Take local government as an example. I agree that the amount spent on so-called 'business experts' and consultants is absolutely frightening. The assumption is that by contracting out public services, such as waste disposal, to private firms we can become more efficient and eliminate waste. But can we? According to what has been called the "Dark Ages Model" of economic thought and linked to Milton Freidman and championed by Roger Kerr of the Business Roundtable here in New Zealand, it is akin to theft not to create as much of a return to shareholders as possible as a result of any business transaction. To do so is being socially responsible. Now it seems to a dummy like me, that if this is done with a public utility which supposedly exists primarily to serve the common good the end result will be more expense, not less. This is because the profit that is generated must come from somewhere and in the case of Council affairs this 'somewhere' surely must be the long-suffering ratepayer. If it is a sin not to generate as much profit as possible, as Roger Kerr believes, then it follows that the temptation must always be there to raise costs for maximum returns to shareholders, not lower them, since this means ever greater profits which can always be passed on to the ratepayer. Thus the more 'efficiency experts' who can be employed drawing vast sums of ratepayer money the better. This might help explain why, on a recent visit to the Community House my wife found it seemed a good idea that an outside water tap be supplied at the rear of the building for the purpose of cleaning unwanted excrement. She also found that she cannot go directly to the Council and put the idea directly to them. The first step is to take the idea to City Enterprises and discuss it with them, who will then assess the cost and pass the information on to the Property Development Manager who will make the final decision whether in fact the expense is in fact warranted. If, after further deliberation, it is considered a good idea then a decision must be made whether it can be included in this years estimates or deferred till next year. But is this the cheapest and most cost effective way of doing things? Why must a simple thing like a tap have to go through two arms of council before any decision can be made? Why not just one? We've been having efficiency drives and cost cutting ever since the whole idea of privatisation of local body affairs was first thought of more than 15 years ago and yet nothing ever seems to get any cheaper. It might also help explain why Project Save (dubbed Project Waste by one councillor), reported in Thursday's Evening Standard(4/4/02) will actually end up losing at least $665,000 in New Zealand dollars. Maybe my argument is flawed and I have got it all wrong. If this is the case I hope there is somebody out there who will be able to point out my error. Regards, Ross Swanston
