Canadian Union of Public Employees (CUPE)


2001 Annual Report on Privatization

"Dollars and Democracy:
Canadians Pay the Price of Privatization"


March 22, 2001



Report Highlights

The high cost of privatization

The tally sheet keeps getting longer.

As the bills come due for sold-off services, Canadians are
feeling the pinch. Not just in their wallets - although
privatization almost always costs taxpayers more. As this
report shows, Canadians are also paying the price of public
services privatization in many other ways. Community safety
nets erode, access to services is limited, environmental and
public health is compromised and the services that bridge
the gaps collapse, diminishing equity and democracy. Those
who rely most on public services are hit hardest, including
women, people of colour, Aboriginal communities, people with
disabilities and others pushed to the margins.

Pocketing the windfall profits are corporations pushing hard
to get in on the services `market' by pitching phony public
private `partnerships' or all-out privatization.

What seems to be a shifting target has firm corporate roots.
Older Canadians tend to see privatization as the threat. For
younger Canadians, it's globalization. In fact, it's two
sides of the same coin, leading to increased corporate
control and a reduced role for governments, for citizens and
for local communities.

Some governments, backed into a financial corner, see
privatization as the only way out of budgetary
belt-tightening. Other governments dive eagerly into
privatization schemes, even if they're swimming in surplus.
Mounting evidence from home and abroad shows elected leaders
have been sold a bill of goods about `government getting out
of the way,' `cutting red tape,' `private sector efficiency
and expertise', topped off by promised savings. The sell-off
starts at the federal level.

Federal pushers

The federal retreat from government's role as funder,
provider and promoter of public services is unprecedented.
Directly and indirectly, the federal government is paving
the way for privatization at all levels. Deep funding cuts
for health, education and social assistance have left
provincial budgets with shortfalls that open the door to
private takeovers of services. The cuts hand
pro-privatization provinces the perfect excuse to sell off
services or download them to municipalities ill-equipped to

At the same time, the federal Liberals are unabashedly
privatizing services and promoting privateers, giving
corporations a role in water infrastructure plans and
putting the private sector in charge of student loans and
university research, while sitting on the sidelines as
private health care encroaches on Canada Health Act

Trade disagreement

The Liberals are using international trade as a further
vehicle to push privatization. Corporate access to public
services is driving negotiations for the General Agreement
on Trade in Services and the Free Trade Area of the
Americas. The North American Free Trade Agreement's investor
state provisions entrench unheard of business power to
challenge government's ability to regulate in the public
interest and provide public services. The FTAA is being
built with similar investor state rules.

The Canadian government's promises that health and education
are not on the GATS table do not reflect the reality of
talks behind closed doors. New analysis indicates crucial
components of Medicare - including public health insurance -
aren't being shielded from the corporate predators, leaving
Canadians to wonder what else is being traded away.

Corporate U

The education `industry' is high on corporate shopping
lists, and Ontario's private university law lets them set up
their own shop. A growing number of private education
businesses are setting up campuses both virtual and real.
New Brunswick has also opened its doors, and Alberta
businesses are gaining degree-granting powers. These moves
threaten an already-weakened public post-secondary system.

Despite corporate and government claims, public funds will
be diverted into private institutions - everything from
student loans to research grants and tax breaks. These funds
will prop up institutions that charge exorbitant tuition
fees to provide a narrow niche of business-oriented programs
that won't meet the growing need for quality education.

Profiting from care

Canada's aging population is going to need increasing
amounts of care. Long-term care corporations see this as a
bonanza. The private sector role in long-term care is
steadily increasing, with a handful of corporations playing
a large role. Those corporations want to get in on the
guaranteed stream of public funding that comes with
long-term care.

Private long-term care scores lower than public care on
almost every count. Private care costs more and delivers
poor-quality patient care. Extremely low wages in private
care facilities lead to high staff turnover, threatening
continuity and quality of care. Redirecting government
funding into publicly owned and operated facilities and
expanding the network of continuing care would provide a
better future for Canada's seniors.

Electrical utilities

Deregulation of electrical utilities has sparked a storm of
problems across North America and in Britain. Promises that
competition will make electricity generation and delivery
more efficient, which in turn will lead to lower electricity
prices and greater consumer choice, have evaporated as
consumers confront skyrocketing bills. Price rigging was
rampant in the deregulated British market and in California
deregulation has led to blackouts and price hikes.

These and other failed deregulation experiments show
electricity is not a commodity that can be stored, bought
and sold like others. Yet Alberta, Ontario and other
Canadian provinces forge ahead with deregulation schemes.
Equally dangerous, deregulation exposes public utilities to
privatization, as a handful of huge multinational
corporations make their move to cash in on higher prices.
Public utilities, many of which invest dividends back in the
community, will be converted into profit-making ventures.

Child care

A growing body of undisputed evidence shows non-profit child
care consistently delivers much higher quality care than
private, for-profit providers. Study after study
demonstrates the widespread social and economic benefits of
quality child care. Yet the Canadian government persists in
breaking its promise for a national, public child care
program. Quebec's public program and new innovations in
British Columbia are models of accessible, high quality
care. Meanwhile, Alberta and Ontario are venturing ever
further down the for-profit road.

Canada's patchwork system means quality of care suffers when
there's no coherent plan and inadequate funding. A recent
national study shows the links between poor quality and
for-profit care. The highest quality of care is found in
not-for-profit facilities with better paid staff, with
quality also linked to higher funding levels and at least
two years of specialized staff training.

UK water exposed

Privatization pushers have long argued privatized British
water is the ideal model, with its allegedly high level of
infrastructure investment and strong regulation. New
research shows that the British companies underinvested in
infrastructure, while overpaying shareholders. The vastly
undervalued sale price of Britain's water system provided a
solid foundation for further profit. The companies were able
to slip through successive price hikes by overstating their
investment plans, then failing to deliver.

While the water regulator has finally clamped down, it is
only because of the enormous problems with privatization.
Price caps introduced in 1999 have spurred some water
companies to get out of the business, as their profit
margins shrink. Cities in the United States are also turning
down or driving out water corporations, leaving
privatization advocates on shaky ground. Yet the
corporations continue to attempt to break into the Canadian
market, with limited success.

Public dividends

Canadians are confronting the high cost of privatization
every day, on many fronts. Governments at all levels must
strengthen, not sell off, public services. Action now will
stop the harm privatization causes to Canadians' quality of
life. Costly privatization experiments from around the globe
show for-profit services don't work.

Reinvestment in public services and public infrastructure
must start immediately, with guarantees of adequate funding.
Public investments must be directed to public sector
delivery, ending the public subsidization of corporate
profits and assuring access to and accountability of public
services. Workers, on the front lines in countless services,
must play a key role in strengthening public services and
must know their rights are protected.

Democratic, healthy communities are what public services are
all about. Investing in public services pays dividends - a
cleaner environment, sustainable jobs, a stronger social
safety net, a healthy economy and a vibrant democracy. It's
time Canadians were able to reap those benefits, instead of
paying privatization's price.

Copyright (c) 2001 Canadian Union of Public Employees.

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