Privatization
Okay, this is one of my favourite topics and I am sure any Conservative bloggers who stumble upon this blog will wonder why the heck I am not a Conservative, while many Liberals will wonder why the heck I am a Liberal. Let me just say this: I never have and never will fully agree with the policies of any party. I will support whichever party has the greatest number of policies I agree with, which may mean in certain areas I will still have fundamental disagreements with them. So lets dig into this topic. Since it is such a broad area, I will focus only on Canada at a federal level, only BC at a provincial level, but be more general at a municipal level since the programs delivered are pretty similiar across the board. I will say though provinces like Saskatchewan and countries like France who have high levels of state ownership need to begin doing some serious privatization.
Federal
There are different methods of privatization. The most common method is a P3 or contracting out as it is sometimes known. In this case, I believe the most responsible decision is to look at each program and figure who can better deliver the program at a lower price. There are a few cases such as the RCMP, Supreme Court of Canada, and military which should be off limits to P3s. Most other areas however P3s are fair game if and only if they can deliver the best value for taxpayers and still provide as good if not better service.
As for Crown Corporations, in 1984 we had way too many crown corporations and I fully support the decision of the Mulroney and Chretien governments to divest of the many that didn't work. Today I would argue that the majority of crown corporations don't need to be privatized, whereas I certainly wouldn't have said this 20 years ago. Of the main ones in Canada, I believe VIA Rail could be privatized as passenger rail is not essential since there are other modes of transportation and some such as The Rockymountaineer here in Western Canada have turned money losing routes into money making routes. I support opening Canada Post up to competition with the private sector, but privatization should only be considered if it is possible for a private company to deliver mail to all areas including remote and rural areas. In terms of the CBC, I support making it an arms-length private non-profit corporation that would continue to get government funding and have to meet a minimum Canadian Content Quota, but the board would not be appointed by the government, but rather any Canadian could become a member of the CBC and therefore vote in choosing the board. Likewise it would no longer be an asset or liability on the government's balance sheet as airports now are, but still operate much the same way it does today. Finally in terms of airports, I think they should be sold off outright as done in most European countries. Some completely private airports such as Heathrow in London are amongst the best in the world. In terms of social programs, I shall discuss that elsewhere, as I did with health care.
Provincial
Here in BC, despite the fact we've had more right of centre governments than left of centre ones, we still have more crown corporations than most other provinces. I support privatization of the liquor stores as buying booze is not an essential need. The government would still regulate it heavily though. In addition the stores would be open on Sundays and at later hours which would be a big convenience to many consumers. As for ICBC, I also support privatization. I should note that a year ago I would have paid more in Alberta and Ontario for insurance than BC, but this year less, since I turned 25. However, my main reason for favouring privatization is not because it subsidizes the higher risk drivers, but rather it would contribute approximately $300 million to the provincial coffers (Dalton McGuinty in the 2003 election pointed out auto insurance companies contribute $1 billion to Ontario coffers, so adjusting for our population difference is how I get that number). Whereas now ICBC largely operates on a break-even basis. As for BC Rail, I support complete privatization, much like CN Rail while BC Ferries and BC Transit should remain crown corporations but individual routes contracted out where cheaper. As for BC Hydro, I know privatization would be political suicide, but I would support it under one condition only: every dollar raised go towards paying down the debt. Since BC Hydro is worth around $7 billion, this would be approximately a 20% reduction in the debt and since BC spends around 33% of its revenue on servicing its debt, it would free up much money to use elsewhere. In fact even the left leaning African National Congress privatized many state owned companies in South Africa in order to fund more social programs.
Municipal
There are few things that can be outright privatized, but in most cases such as road maintenance, libraries, garbage collection, park maintenance, transit, and water, contracting out is possible, but should only be done if it is more cost effective and can deliver better outcomes in terms of service. It shouldn't be done for ideological reasons nor should it be opposed for ideological reasons, but done on a case by case basis.
Next topic will be on our social programs excluding health care and education. This seems appropriate in light of the Conservative spending cuts.
Federal
There are different methods of privatization. The most common method is a P3 or contracting out as it is sometimes known. In this case, I believe the most responsible decision is to look at each program and figure who can better deliver the program at a lower price. There are a few cases such as the RCMP, Supreme Court of Canada, and military which should be off limits to P3s. Most other areas however P3s are fair game if and only if they can deliver the best value for taxpayers and still provide as good if not better service.
As for Crown Corporations, in 1984 we had way too many crown corporations and I fully support the decision of the Mulroney and Chretien governments to divest of the many that didn't work. Today I would argue that the majority of crown corporations don't need to be privatized, whereas I certainly wouldn't have said this 20 years ago. Of the main ones in Canada, I believe VIA Rail could be privatized as passenger rail is not essential since there are other modes of transportation and some such as The Rockymountaineer here in Western Canada have turned money losing routes into money making routes. I support opening Canada Post up to competition with the private sector, but privatization should only be considered if it is possible for a private company to deliver mail to all areas including remote and rural areas. In terms of the CBC, I support making it an arms-length private non-profit corporation that would continue to get government funding and have to meet a minimum Canadian Content Quota, but the board would not be appointed by the government, but rather any Canadian could become a member of the CBC and therefore vote in choosing the board. Likewise it would no longer be an asset or liability on the government's balance sheet as airports now are, but still operate much the same way it does today. Finally in terms of airports, I think they should be sold off outright as done in most European countries. Some completely private airports such as Heathrow in London are amongst the best in the world. In terms of social programs, I shall discuss that elsewhere, as I did with health care.
Provincial
Here in BC, despite the fact we've had more right of centre governments than left of centre ones, we still have more crown corporations than most other provinces. I support privatization of the liquor stores as buying booze is not an essential need. The government would still regulate it heavily though. In addition the stores would be open on Sundays and at later hours which would be a big convenience to many consumers. As for ICBC, I also support privatization. I should note that a year ago I would have paid more in Alberta and Ontario for insurance than BC, but this year less, since I turned 25. However, my main reason for favouring privatization is not because it subsidizes the higher risk drivers, but rather it would contribute approximately $300 million to the provincial coffers (Dalton McGuinty in the 2003 election pointed out auto insurance companies contribute $1 billion to Ontario coffers, so adjusting for our population difference is how I get that number). Whereas now ICBC largely operates on a break-even basis. As for BC Rail, I support complete privatization, much like CN Rail while BC Ferries and BC Transit should remain crown corporations but individual routes contracted out where cheaper. As for BC Hydro, I know privatization would be political suicide, but I would support it under one condition only: every dollar raised go towards paying down the debt. Since BC Hydro is worth around $7 billion, this would be approximately a 20% reduction in the debt and since BC spends around 33% of its revenue on servicing its debt, it would free up much money to use elsewhere. In fact even the left leaning African National Congress privatized many state owned companies in South Africa in order to fund more social programs.
Municipal
There are few things that can be outright privatized, but in most cases such as road maintenance, libraries, garbage collection, park maintenance, transit, and water, contracting out is possible, but should only be done if it is more cost effective and can deliver better outcomes in terms of service. It shouldn't be done for ideological reasons nor should it be opposed for ideological reasons, but done on a case by case basis.
Next topic will be on our social programs excluding health care and education. This seems appropriate in light of the Conservative spending cuts.
posted by Monkey Loves to Fight | 9:26 PM
4 Comments:
Now I am not against BC Ferries not being privatized. I think the real solution here is put each route out for tender and compare each one with what the government doing it in house would cost. This would create competition, while ensuring whoever can run the routes the best government or private sector does it.
The problem is some routes will never be profitable at reasonable rates. The ferries are to a degree like any other government service - there shouldn't be an expectation that they turn a profit. Gordon Campbell doesn't turn a profit - we pay him to provide a service. Larger routes will always subsidize smaller ones. No private contractor will want to run the Southern Gulf Islands routes, but the Tswwassen to Victoria would probably look attractive.
This can be a problem so I believe by requiring them to compete for the contract is the most efficient method, and this would include the government competing as well for the contract.
If you sign a contract with one company, over time it becomes the only company with the expertise and infrastructure to run it properly, and the competitive bidding process disappears.
The problem is some routes will never be profitable at reasonable rates. The ferries are to a degree like any other government service - there shouldn't be an expectation that they turn a profit. Gordon Campbell doesn't turn a profit - we pay him to provide a service. Larger routes will always subsidize smaller ones. No private contractor will want to run the Southern Gulf Islands routes, but the Tswwassen to Victoria would probably look attractive.
I think it depends on the level of the subsidy. If the subsidy is lower than what it would be in house, then contract it out, if not keep in house.
If you sign a contract with one company, over time it becomes the only company with the expertise and infrastructure to run it properly, and the competitive bidding process disappears.
Actually there have been many examples of successful contracting out. Here in BC, most BC Transit operations are contracted out already to the private sector as is highway maintenance and there is always healthy competition when it comes up for bidding again.
I think it depends on the level of the subsidy. If the subsidy is lower than what it would be in house, then contract it out, if not keep in house.
Thereby fragmenting the company with different parts of it after the same resources (docks, workers), and introducting much duplication in administration (and maintanence?, support services?)
there is always healthy competition when it comes up for bidding again.
Driving busses, paving roads and picking up litter is one thing, operating massive ferry boats is another. I think it would be much harder to run a route for 5 years here and there depending on if you win the contract. As for contracting out more or less everything, I must say I disagree in prinicple with turning our government into a glorified temp agency, contracting everything out willy nilly leaving only a hollow shell in Victoria.
Thereby fragmenting the company with different parts of it after the same resources (docks, workers), and introducting much duplication in administration (and maintanence?, support services?)
Not necessarily. In the case of BC Transit and road maintenance, those have done quite well under contracting out which started under the Social Credit, but was never reversed under the NDP. In the case of Northumberland Ferries, I am not sure whether privatization has been a good or bad thing although it was part of the deficit reduction plans back in the 90s. A fragmented company can sometimes work better than a larger one due to greater specialization. It just depends on who the company is.
Driving busses, paving roads and picking up litter is one thing, operating massive ferry boats is another. I think it would be much harder to run a route for 5 years here and there depending on if you win the contract. As for contracting out more or less everything, I must say I disagree in prinicple with turning our government into a glorified temp agency, contracting everything out willy nilly leaving only a hollow shell in Victoria.
Not necessarily. There are already private chartered companies that do passenger service, so I think it is quite doable.
I don't think we should contract out everything, only where it is more efficient to do so. Now the police, military, prisons, justice system, and anything else that could be considered a core government function (I mean from a strict libertarian view) shouldn't even be considered for contracting out. Other stuff contracted out should only be done when beneficial, not in all cases. Besides all vessels have to follow Transport Canada guidelines, so one cannot operate a ferry without a Transport Canada licence.
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