Tag Archives: International

Is Privatization on Its Way Out?

Source: Donald Cohen, HuffPost, July 27, 2017

According to a new report by the Transnational Institute, cities across Europe are increasingly deciding to reclaim public goods like water, energy, and health care from corporations and private investors. For example, fourteen cities in the Catalonia region of Spain have brought their water under public control in the past two years alone. … As always, the movement is starting at the bottom.  There’s Milford, Connecticut, a small city pushing to purchase its water system after learning that the corporation that owns it plans to raise rates by nearly 30 percent.  There’s New York, which just brought back state workers to provide IT help desk services after concerns about rising costs in a contract with IBM.  There’s Atlantic City, New Jersey, which earlier this month passed an ordinance to ensure residents get to vote on any action by the state to sell or lease the city’s water system.  There’s Baltimore, Maryland, where teachers just recruited hundreds of new public school students after weeks of knocking on doors. And Miami, Florida, where parents and teachers rallied over the weekend to demand more funding for public education and regulation of charter schools.

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Trump White House weighs unprecedented plan to privatize much of the war in Afghanistan

Source: Jim Michaels, USA Today, August 8, 2017
 
The White House is actively considering a bold plan to turn over a big chunk of the U.S. war in Afghanistan to private contractors in an effort to turn the tide in a stalemated war, according to the former head of a security firm pushing the project.  Under the proposal, 5,500 private contractors, primarily former Special Operations troops, would advise Afghan combat forces. The plan also includes a 90-plane private air force that would provide air support in the nearly 16-year-old war against Taliban insurgents, Erik Prince, founder of the Blackwater security firm, told USA TODAY. …

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Kushner and Bannon Team Up to Privatize the War in Afghanistan
Source: Tim Shorrock, July 14, 2017

Jared Kushner has been busy, and not only with the Russians. This week, amid the hoopla surrounding his meeting with a Moscow lawyer about the 2016 election, the The New York Times published an intriguing story about his role in a plan to privatize the war in Afghanistan. Last Saturday, Trump adviser in chief Stephen Bannon, with Kushner’s backing, went to the Pentagon to arrange a discussion between Defense Secretary Jim Mattis and “two businessmen who profited from military contracting,” the Times reported. These weren’t ordinary contractors: They were Erik Prince, the notorious founder of Blackwater, the all-purpose mercenary army, and Stephen Feinberg, a New York financier who owns and controls DynCorp International, the largest US contractor in Afghanistan. …

Private financing wrong direction for Canadian infrastructure bank

Source: CUPE, March 20, 2017

A new report written by CUPE economist Toby Sanger warns that private financing of the proposed Canada Infrastructure Bank could double the cost of infrastructure projects, and shows how the bank can instead provide low-cost, public financing for much-needed projects. The study was published by the Canadian Centre for Policy Alternatives in advance of the federal budget, where more details of the proposed bank are expected to be unveiled. Sanger outlines the dramatic shift from Liberal election promises of a bank with low-cost financing to the current plan, which focuses on higher-priced private borrowing. The shift will increase pressure to privatize key infrastructure, and will mean less public funding is available to deliver public services and infrastructure. … The study outlines how the federal government could establish a Canadian infrastructure bank that works in the public interest by providing low-cost financing for public infrastructure.

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Toward the Efficient Impact Frontier

Source: Michael McCreless, Stanford Social Innovation Review, Winter 2017

For many years, the field of impact investing played host to great debates that involved seemingly irreconcilable positions: Was it possible to achieve both market-rate financial returns and meaningful social impact? Could philanthropic funding coexist effectively with commercial investment? Now, as the field reaches a new stage of maturity, leading social finance organizations are developing models that bring greater sophistication to the work of evaluating investment options. These models, like the investors that create them, vary widely. But they reflect a shared commitment to moving beyond simple either-or choices—and to moving from broad questions to specific solutions. At Root Capital, leaders are using ideas from mainstream financial analysis to calibrate the role that subsidies play in their investing practice.

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Across the Returns Continuum
Source: Matt Bannick, Paula Goldman, Michael Kubzansky, & Yasemin Saltuk, Stanford Social Innovation Review, Winter 2017

For many years, the field of impact investing played host to great debates that involved seemingly irreconcilable positions: Was it possible to achieve both market-rate financial returns and meaningful social impact? Could philanthropic funding coexist effectively with commercial investment? Now, as the field reaches a new stage of maturity, leading social finance organizations are developing models that bring greater sophistication to the work of evaluating investment options. These models, like the investors that create them, vary widely. But they reflect a shared commitment to moving beyond simple either-or choices—and to moving from broad questions to specific solutions. Omidyar Network has built a framework for pursuing investment opportunities that takes into account not only firm-level impact but also market-level impact.

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The heavy price of Santiago’s privatised water

Source: Daniel Gallagher, The Guardian, September 15, 2016

When it comes to water, Chile is failing its citizens. In Santiago, the nation’s capital, millions of people are regularly left without running water for days at a time and experts are warning of water scarcity to come across the country as temperatures rise and glaciers retreat. … A recent protest saw at least 2,000 people take to the capital’s streets to demand the repeal of laws that privatised Chile’s water supply. At the heart of the protest and others like it in recent years lies frustration that the privatisation of water has kept prices unnecessarily high, delivered poor service and done little to address concerns over insufficient supply in the future. … The process of water privatisation in Chile which began in 1981 under General Pinochet established a model for water management that strengthened private water rights, adopted a market-based allocation system and reduced state oversight. That model became emblematic of neoliberal reforms heavily promoted by the World Bank and International Monetary Fund. These reforms fundamentally changed the way water is valued and managed globally. No longer a mere necessity for human survival, water has become an object of international financial speculation and experts predict that “blue gold” will soon become the most important physical commodity worldwide, dwarfing oil and precious metals. … But there are signs of a government change of heart, perhaps spurred by public sentiment: a new poll suggests that 74% of Chileans support a return to the public ownership of water. The Chilean government’s special committee on water resources recently proposed reforms to national water laws. Those proposals, now under discussion in congress, would prioritise human consumption over commercial use and grant the Water Directorate new oversight powers. The private sector is resisting reform, however. The Confederation of Production and Commerce, representing the Chilean private sector, made its opposition clear in a statement (pdf) last month. By declaring water a “public good”, it said, the proposed reforms had “a clear intent on expropriating [private] water rights”. …

PEARSON’S QUEST TO COVER THE PLANET IN COMPANY-RUN SCHOOLS

Source: Anya Kamenetz, Wired, April 12, 2016

… Pearson would like to become education’s first major conglomerate, serving as the largest private provider of standardized tests, software, materials, and now the schools themselves. To this end, the company is testing academic, financial, and technological models for fully privatized education on the world’s poor. It’s pursuing this strategy through a venture called the Pearson Affordable Learning Fund. Pearson allocated the fund an initial $15 million in 2012 and another $50 million in January 2015. Students in developing countries vastly outnumber those in wealthy nations, constituting a larger market for the company than students in the West. Here in the US, Pearson pursues its privatization agenda through charter schools that are run for profit but funded by taxpayers. It’s hard to imagine the company won’t apply what it learns from its global experiments as it continues to expand its offerings stateside. … Two of the most prominent, the Omega Schools in Ghana and Bridge International Academies based in Kenya, have hundreds of campuses charging as little as $6 a month. They locate in cheaply rented spaces, hire younger, less-experienced teachers, and train and pay them less than instructors at government-run schools. The company argues that by using a curriculum reflecting its expertise, plus digital technology—computers, tablets, software—it can deliver a more standardized, higher-quality education at a lower cost per student. All Pearson-backed schools agree to test students frequently and use software and analytics to track outcomes. …

Public-private partnerships: The global debt iceberg?

Source: Tim Jones, Brettonwoods Project, June 29, 2016

According to the World Bank public-private partnerships (PPPs), a catch-all term used widely to indicate investments involving both the public and private sectors, are now responsible for 15-20 per cent of infrastructure investment in developing countries. … The cost to a government of using PPPs to invest is usually higher than if it had simply borrowed the money itself. This is because private sector borrowing costs more, private contractors demand a significant profit, and negotiations are normally weighted in the private sector’s favour, particularly when government familiarity with and capacity to develop favourable PPP contracts are weak, as is often the case in developing countries. A 2015 study by the World Bank’s Independent Evaluation Group found that of 442 World Bank-supported PPPs, no more than three per cent were assessed for their fiscal impact on the country involved.

Research commissioned by the European Parliament in 2014 suggests that PPPs are the most expensive way for governments to invest in infrastructure, ultimately costing more than double financing made through bank loans or bond issuance. According to research by Maximilien Queyranne from the IMF Fiscal Affairs Department, the fiscal risks of PPPs are “potentially large” because they can be used to “move spending off budget and bypass spending controls” and “move debt off balance sheet and create contingent and future liabilities”.

60 SOCIAL IMPACT BONDS ACROSS 15 COUNTRIES SHOW GROWING GLOBAL REACH/22 SOCIAL IMPACT BONDS HAVE POSTED RESULTS SINCE FIRST LAUNCH IN 2010

Source: Social Finance, July 5, 2016

The Social Finance Global Network launches today (5 July) its latest white paper, Social Impact Bonds: The Early Years.

Key highlights of the report:

  • 60 Social Impact Bonds have launced in 15 countries, raising more than $200m in investment to address social challenges
  • 22 projects have posted results, 21 of which have posted positive outcomes for beneficiaries.
  • 12 programmes have made outcomes payments and 4 Social Impact Bonds have repaid investors in full with a return on their investment

The white paper reflects the shared lessons from the Social Finance Global Network, across sister organizations in the UK, US and Israel-which, together, represent the largest pool of Social Impact Bond expertise globally, across multiple jurisdictions. …

… Alongside the paper, Social Finance is also launching its live global database of Social Impact Bonds. The database can be sorted by country, issue area, investor, payor and service provider, providing a comprehensive overview of Social Impact Bonds launched to date and a snapshot of the many in development. This is an important open platform for the community of global practitioners and others who are actively following this rapidly evolving field. User input will be critical to develop this living, collaborative resource.

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Social Impact Bonds: The Early Years
Source: Social Finance, June 30, 2016

The Social Finance global network is launching its first white paper on the state of the Social Impact Bond market on 5 July. The paper will look back to the launch of the first Social Impact Bond in Peterborough in 2010 and chart the development and take up of the model across different countries and different social issues. … We reflect on the value and impact the model has brought to delivering more effective programs, the complexity the model entails in identifying social outcomes and attribution methods, and the opportunities we believe will present to the market in the future. Key questions discussed include:

  • What makes a successful Social Impact Bond market?
  • Are Social Impact Bonds really as complex as they seem?
  • How do Social Impact Bonds scale?
  • What follows a Social Impact Bond?

Alongside the paper, we will be launching the most comprehensive online database of Social Impact Bonds worldwide. The online directory can be sorted by country, issue area, investor, payer or service provider, giving a complete overview of live and proposed programmes worldwide. Developed by the three Social Finance offices in the United Kingdom, Israel, and the United States—the map provides users with a view of the Social Impact Bond ecosystem, and functions as a market-sharing tool for those interested in the global Impact Investing market.

Privatisation is hurting the social care workforce

Source: Peter Beresford, The Guardian, June 21, 2016

Once the domiciliary care workforce was made up of local authority home helps who had valued, secure jobs. Now it is typified by low paid, part-time care assistants, with minimal job security and career prospects. The workforce is increasingly attracted to other sectors, such as supermarkets, for better terms and conditions. A recent review (pdf) painted a dismal picture of working conditions in the care sector. Some three in every four of England’s 15,000 care homes are now run for profit and the proportion is rising. Des Kelly, who until recently was the director of the National Care Forum has said: “On a good day, we reckon we would be able to count 20% [non-profit] and 6% or so left in the public sector … I don’t think that represents a healthy mixed economy. What we have done very effectively over a period of about 30 years is to denationalise the care sector.” … Nor does privatisation seem to have benefited service users. One young, unqualified worker says: “I visit one elderly man, who lives with his son. He served in the second world war. His son has severe mental health problems, and is unable to care for himself. I visit their house in the morning to help with daily tasks. They live in squalid, nasty conditions. I have very little nutritious, acceptable food to cook for them – [just] microwave and tinned meals. I’m not specialised or trained in caring, and I’m paid £7 an hour for the work I do. This is the best on offer for this veteran and his son.” …

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Outrage at privatising child protection should spark an overhaul of the whole system
Source: Anna Gupta, Brigid Featherstone, Kate Morris, Sue White, The Conversation, July 28, 2014

The Department for Education’s proposal that for-profit companies could provide child protection services and other statutory functions for families caused a major public uproar this spring – and the furore is still rumbling. A front-page article in the Guardian, tens of thousands of signatories to various petitions, a letter signed by 37 academic experts, plus many individual replies to the consultation all led to an apparent u-turn, with the government announcing it was abandoning the idea. It has since transpired that the u-turn is not quite as it appears: the revised regulations will not prevent an otherwise profit-making company from setting up a separate not-for-profit subsidiary to take on these sorts of contracts. This back-door route will allow companies to profit from social care contracts by channelling funds back to parent firms. Many profit-making companies are already involved in running children’s homes, and under the new proposals, those same companies could be involved in making crucial decisions on whether or not children are taken into care….

Government U-turn over privatising child protection services
Source: Patrick Butler, The Guardian, June 20, 2014

Outcry by social work experts leads ministers to say no to private companies but to consider charities and social enterprises… Proposals to allow local authorities in England to privatise child protection services have been abandoned. The Department for Education said on Friday that profit-making organisations would be barred from carrying out core child safeguarding duties, although councils would still be able to bring in charities and not-for-profit firms if they wished. The decision follows criticism from experts – including social work academics, professionals and charities – that opening up child protection to the market would distort decision-making and dilute local accountability over sensitive matters such as taking a child into care….

Privatise child protection services, Department for Education proposes /Experts sound alarm over proposal from Michael Gove’s department to outsource children’s services to private firms
Source: Patrick Butler, The Guardian, May 16, 2014

The power to take children away from their families could be privatised along with other child protection services under controversial plans the government has quietly announced. The proposal from Michael Gove’s Department for Education (DfE) to permit the outsourcing of children’s social services in England to companies such as G4S and Serco has alarmed experts. They say profit-making companies should not be in charge of such sensitive family matters, and warn that the introduction of the profit motive into child protection may distort the decision-making process. A DfE consultation paper published last month argues that enabling local authorities to outsource children’s social services will encourage innovation and improve outcomes for at-risk youngsters….

Public Sector Unions and Privatization: Evidence From the Eldercare Sector in Danish Municipalities

Source: Søren Kjær Foged and Lasse Aaskoven, Journal of Public Administration and Research Theory, June 22, 2016

Abstract:
Privatization varies considerably among local governments. One of the oft-listed explanations is the ability of public employees to block privatization. However, many studies on the influence of public employees on privatization do not use very precise measures of the influence of public employees, they have been unable to isolate a one-way effect, and the studies have not been attentive to whether the effect varies for different market forms. In this article, we focus on privatization in Denmark through a voucher market without price competition for eldercare services. Using new data for all 98 Danish municipalities in 2012, we are able to measure the strength of the public eldercare union as well as the number of the public eldercare workers relative to the number of local voters. We find that the increased union strength measured in terms of union density at the municipal level leads to substantially and significantly less privatization through the voucher market. By comparison, the estimated relationship between the relative number of public workers and privatization does not reach statistical significance. Features of the voucher market and qualitative evidence suggest that the union influence primarily goes through a direct user channel, that is through union influence directed at the service users, whereas a minor effect possibly runs through a political channel, that is lobbying directed at the local politicians.