Does privatization of public sector services work? In many cases, no. But it is ever so satisfying.
Just look at the public reaction in Toronto, where new Mayor Rob Ford wants to privatize garbage collection. Those who had to put up with a messy, unhealthy strike in 2009 are eager to lay a figurative beat-down on the city workers involved.
Unfortunately, revenge will not be as sweet as it could be given a previous administration’s ill-advised agreement to find other work for those displaced by outsourcing. They may eventually be forced out, but the city can’t simply fire the lot of ’em, to the chagrin of fed-up taxpayers.
Moving to private garbage collection is probably inevitable in Toronto, as Ford made it a campaign promise and the idea has plenty of traction. As Toronto is one of the few cities still using in-house staff to pick up the trash – more than 80 per cent, including Waterloo Region, use private services – there are plenty of examples showing that outsourcing works for this service.
In some ways, it would be gratifying in Toronto and elsewhere to see a wholesale swing to privatization simply as a means to counter unfair and unsustainable property tax increases, largely fueled by wages and salaries, along with poor decisions at the council level. But, and you knew there had to be a but, that could easily backfire.
Fact is, there are enough case studies to wave a yellow flag before we get rolling too far with that notion.
Few people outside of those with profits in mind would care to see water services privatized, for instance.
We’re already seeing rate increases far beyond inflation, largely due to provincially-mandated cost-recovery models that means we’ll be paying for infrastructure upgrades directly through water and sewer fees. Facing the same costs to deliver services, plus the desire for profit, private companies would either boost rates faster or cut corners to trim their costs. Our schadenfreude over turfed municipal workers being replaced by lower-paid employees wouldn’t be enough to make up for that.
In such cases, we’re better off keeping the services under public control. Better still under political control, where we can bring pressure to bear on our elected officials to keep prices under control. Well, that’s the theory at any rate. We have a long way to go before politicians listen to what citizens are telling them, but every once in a while we get really fed up and the result is what happened in Toronto’s municipal election.
Closer to home, we’ve seen some shift in the policy on public transit. In last fall’s election, voters sent a strong message to council that they believe light rail transit will be no more than a white elephant. More recently, plans to shift spending to transit far beyond rates reflected in usage numbers by those who pay the bills are meeting with a growing backlash.
All too often, budgets and spending decisions go only one way: up. Case in point? The province has uploaded $11.8 million in welfare payments, removing that item from Waterloo Region’s budget. Instead of cutting their baseline budget – 3.2 per cent or $47 per household in tax savings – administrators have already decided to roll that money into other spending. A further tax increase – aka the usual – will soon be announced as the region moves along in its budget process, handcuffed by pay raises it committed to while ignoring the province’s request to free public-sector wages.
The problem with simply returning to the well for annual tax increases is clearly on display in Kitchener, where the city is proposing a stormwater user fee that will amount to about $123 a year on average. That’s the equivalent of a tax hike of 6.4 per cent. On top of that, it’s looking at a 1.94 per cent jump in property taxes. The bottom line? The average resident would be paying an additional 8.4 per cent to the municipality, receiving nothing more in return.
There may be some relief, however, as new councillors there are pressing for reductions in those numbers. They’ve done the math, factoring in water and sewage rates pushing double-digit increases, and see quite clearly that everything adds up to removing money from residents’ wallets at a pace that far outstrips the rate of replenishment.
Local officials need to see the big picture. That proverbial one-and-only source of tax money is under attack on multiple fronts. Something’s got to give. For municipalities, that means reducing spending on other programs – and thus overall tax rates – to compensate. If Kitchener, for instance, needs $123 a year from each household to deal with stormwater infrastructure, it had better find a way to reduce property taxes by a commensurate amount. The same applies for water and wastewater fees, projected to grow at three, four or five times the rate of inflation for several years. Want another $60 a year, as was the case with increases in Woolwich in 2010? Find a way to chop that amount from general taxes.
That would be far more satisfying to taxpayers, and might even stem the call for privatization … or for the heads of non-compliant politicians.