From the perspective of Manitoba – a state which makes Poland (where I sit today) look positively tropical – the heat of the debate is in SIBs et al with a lot of the usual guff (“neoliberal” / “people before profit’) and other silly cant which misses the point that a government without cash is simply impotent.
Public Service Is A Good Investment
Lynne Fernandez – Winnipeg Free Press
The results of the recent federal election are a likely indication of what Manitobans want to see from their next provincial government: transparency; stimulus spending on ailing infrastructure, financed by deficits; a transition to a green economy; and respect and support for Canada’s public service workers.
Government spending, public-sector employees and unions seem to come under the gun in society, with an assumption a healthy public service sector and public spending are somehow a net drain on society. Nothing could be further from the truth.
In an effort to have its cake and eat it, too, many governments look to P3s or social impact bonds (a way of funding social services using private-sector involvement) to provide services cheaper and more efficiently. The private sector, according to the populist economic theory of neoliberalism, can do anything better than government, and as costs come down, so can taxes. Cut taxes, transfer responsibility to the private sector, shrink government and voila — we have an efficient allocation of resources. Textbook perfect.
Real life, however, rarely follows populist theory. In a report published by the Canadian Centre for Policy Alternatives — Saskatchewan, 22 incidents of outsourcing of public services through P3s in Canada are evaluated. From snow-clearing nightmares in Halifax to a bankrupt private surgical clinic in Alberta to P3 mismanagement in B.C., examples abound of privatization — also known as outsourcing — gone awry.
Even social programs are susceptible to the privatization grab. Social impact bonds are being used to fund services typically supported by taxes, such as in prisons. The public sector issues a bond, and the private or social sector finances and delivers services under contract to the public sector. Specific delivery timelines and targets, such as a reduction in recidivism, are set. If targets are met, the agency can cash the bond and receive reimbursement for its costs and a rate of return based on performance.
Like P3s, social impact bonds are extremely complex, and the claims made about them are equally dubious. As one expert, Dexter Whitfield, stated: “The organizational structure of SIB projects is more innovative than the services they deliver and the methods they use to achieve outcomes.”
Whether with P3s or impact bonds, corporations have to put profit ahead of social outcomes; in the case of the bonds, that means only those individuals with the best chance of succeeding with be chosen to participate.
Even then, there are examples in the U.S. and U.K. of impact bonds not meeting targets, leaving governments to spend large sums of money to clean up the aftermath, and few examples of bonds that have delivered.