Tag Archives: International

More Headaches than it’s Worth: Assessing Privatized and Semi-Privatized Waste Collection

Source: David Campanella, Canadian Centre for Policy Alternatives, June 2015

A review of international econometrics studies on the pros and cons of privatization and semi-privatization waste collection suggests full privatization can cause more headaches than it’s worth. The review of decades’ worth of studies concludes there is no empirical evidence to support the claim that privatizing waste collection services is more cost efficient. The academic literature points to two key factors that end up being costly for governments who fully privatize waste collection: lack of competition in the waste collection sector and large, often unaccounted for administrative costs required to deal with private firms.

This study reviews econometrics studies of privatization and semi-privatization of solid waste collection in the U.S., the UK, the Netherlands, Spain, Sweden, Ireland, and in Canada. The conclusion of decades of empirical research is that there is no clear connection between private waste collection and cost reduction. When all the relevant factors are included, it appears that privatization is often more of a headache than it’s worth. What’s the number one reason U.S. city managers cite for reversing a decision to privatize services? Insufficient cost savings. In solid waste collection, studies reveal that any initial cost savings tend to diminish over time, and that cost savings have become increasingly less likely.

There are two main reasons why private waste collection fails to reduce municipal costs:
1. A widespread lack of competition; and
2. Large and often unaccounted for administrative costs from dealing with private firms.


Following Failure: Saskatchewan government seems doomed to repeat the P3 mistakes of other provinces

Source: Simon Enoch, Cheryl Stadnichuk, Canadian Centre for Policy Alternatives, Saskatchewan Notes, June 2015

From the abstract:
As the Saskatchewan government embarks on a major public-private-partnership (P3) school build, it regularly assures the public that it has learned from the P3 mistakes of other jurisdictions. Despite these assurances, the recent Saskatchewan Auditor-General report and the hiring of Partnerships BC as a P3 advisor to the government demonstrates that rather than learning from the P3 mistakes of the past, the government seems poised to repeat them. Simon Enoch and Cheryl Stadnichuk identify the various ways the government’s P3 process continues to harbour the same biases and faulty assumptions of other failed P3 projects across the country.

Vote for the Privatization Scam of the Year award

Source: National Union of Public and General Employees Ottawa, June 15, 2015

Almost all privatization deals are bad news for the public. The profit motive leads to higher costs, reduced services, and a whole lot of sleaze. Privatization Scam of the Year Awards shows link between privatization and sleaze The Privatization Scam of the Year Awards draw attention to the profiteering, lower standards and outright corruption that come with privatization. …

…The nominees for the 2014 “Scammie” are:
• Ontario’s P3 privatizations schemes that added $8 billion to the cost of public infrastructure
• British Columbia’s replacement of home care professionals with unpaid volunteers
• New Brunswick’s secret negotiations to privatize food and cleaning services in hospitals
• Replacing public employees with consultants in Saskatchewan — at double the cost
• Interpol called in to help with investigation of Montreal hospital P3 privatization scheme corruption

Filthy hospital ward ‘cleaned’ by private firm fuels fears Tory privatisation putting public at risk

Source: Dan Warburton, Mirror, April 28, 2015

A state-of-the art hospital has ordered an urgent probe after the Mirror uncovered shocking ­failings by the private firm in charge of keeping it clean. G4S vowed to “rectify the issues” after we showed bosses photos of bags of potentially infectious ­clinical waste strewn across the wards. The damning evidence, given to us by a whistleblower, emerged days after the security giant was handed a lucrative new contract to ­maintain and clean Lister Hospital in Stevenage, Herts. An appalled insider said: “This level of dirt puts the public at risk. Would you want your family going in to a hospital like this and receiving treatment?” The images will fuel fears privatisation of NHS services by the Tory-led government is putting public safety at risk…. G4S won a second contract for cleaning at the Lister Hospital earlier this month but sparked anger by restructuring workers’ pay. In a letter to staff in February, the firm warned cleaners it had to alter hourly rates due to brutal Tory NHS cuts. ….

overflowing trash

Special report: Universities

Source: Economist, Vol. 414 no. 8931, March 28, 2015

Mix and match
Both provision and funding of higher education is shifting towards the private sector…

…In most European countries the state pays 80-100% of the costs of tuition. The main advantages of this model are equity and cost control. Where it works well—in northern Europe—graduate education levels are uniformly high. Where it works badly—in southern Europe—they are uniformly low. American uses mixed funding, with individuals paying most of the costs of tuition and the government helping out with loans and grants. In some countries with similar models, such as Japan and South Korea, individuals and families pick up the tab. These systems tend to be better funded and more expensive than the European ones (see chart 4) because people fork out readily, and costs are harder to control…. Another option is to make individuals pay more. In America, retrenchment in state budgets has pushed up tuition fees. In California, for instance, they have tripled over 15 years, and a further 28% rise is proposed. Outside America, the first big shift towards private funding happened in Australia, where tuition fees were jacked up in the late 1980s. A host of other countries followed, including New Zealand, Chile, South Africa, some of the former Soviet republics, Britain and Thailand…. Another source of private funds for universities is philanthropy. Endowments at some American universities dwarf income from fees….

….The biggest provider of higher education that nobody has ever heard of is Laureate, an American for-profit education company with revenues of $4 billion, nearly 1m students and 70,000 staff. It does not promote its brand because it prefers to be known through the names of the 80-plus universities and colleges it owns all over the world….

Four Blackwater guards sentenced in Iraq shootings of 31 unarmed civilians

Source: Spencer S. Hsu and Victoria St. Martin, Washington Post, April 13, 2015

A federal judge Monday sentenced a former Blackwater Worldwide security guard to life in prison and three others to 30-year terms for killing 14 unarmed civilians in a Baghdad traffic circle in 2007, an incident that fomented deep resentments about the accountability of American security forces during one of the bloodiest periods of the Iraq war…. Prosecutors said the four defendants, among 19 Blackwater guards providing security for State Department officials in Iraq, fired machine guns and grenade launchers in a reckless and out-of-control way after one of them falsely claimed that their convoy, called Raven 23, was threatened by a car bomber….. Attorneys for Slough, Liberty and Heard criticized prosecutors’ decision to charge them with using military firearms while committing a felony, an offense that carries a mandatory minimum sentence of 30 years in prison, twice as long as a manslaughter conviction. The charge has primarily been aimed at gang members, rarely against police officers accused of misconduct and never before against security contractors given military weapons by the U.S. government….

Why Public-Private-Partnerships (PPPs) don’t work: The many advantages of the public alternative

Source: David Hall, Public Services International Research Unit (PSIRU), February 2015

From the summary:
The new report Why Public-Private-Partnerships (PPPs) don’t work: The many advantages of the public alternative contains a combination of 30 years of research by David Hall, former Director of Public Services International Research Unit (PSIRU) University of Greenwich, UK.

This report assesses the PPP experience in both industrialised and developing countries.

The many case studies analysed, from United Kingdom to Chile, shows that PPPs have failed to live up to their promise. In most cases, they are an expensive and inefficient way of financing infrastructure and services, since they conceal public borrowing, while providing long-term state guarantees for profits to private companies.

The author proposes a public alternative to this system, in which national and local governments can continue to develop infrastructure by using public finance for investment, and public sector organisations to deliver the service.

Opinion: Designing Private Cities, Open to All

Source: Alex Tabarrok and Shruti Rajagopalan, New York Times, March 16, 2015

….As the world urbanizes, we need to experiment with new urban forms and new forms of urban planning, and privately designed and operated cities — proprietary cities — like Jamshedpur, India, or Reston, Va., may provide answers….. Private cities are also thriving in the United States. Companies created proprietary communities in Reston, Va., and Irvine, Calif., in the 1960s, which were recently ranked by CNN Money magazine as the 10th and 14th best places to live in America, respectively, because of their efficient city services and pleasing integration of business, commercial and residential uses.
Throughout the United States, new housing is governed privately. Millions of Americans live in homeowner associations that often provide security, garbage collection and transportation. Some large cities supplement public police with private security. San Francisco, for example, has had a private police force protecting some downtown areas for almost 170 years…..

Nonprofit contractor sent government $1.1 million bill for parties and retreats

Source: Scott Higham, Washington Post, March 13, 2015

The largest nonprofit contractor working for the U.S. Agency for International Development during the height of the wars in Iraq and Afghanistan billed the government $1.1 million for staff parties and pricey retreats — three of them held at one of the poshest destinations on the East Coast, Nemacolin Woodlands Resort in Pennsylvania. International Relief and Development of Arlington, Va., collected hundreds of millions of dollars to work in the war zones and help impoverished nations around the world. At the same time — between 2007 and 2010 — its executives were using IRD’s government overhead account to fund the parties and retreats, according to financial records provided by IRD to The Washington Post. The previously undisclosed retreats to Nemacolin were the fanciest by far. The five-star spa and resort, 180 miles northwest of Washington, is nestled in the Allegheny Mountains near Fallingwater, the famous home designed over a waterfall by Frank Lloyd Wright. IRD spent $484,338 on those retreats at the height of U.S. war spending, billing the expenses to the government as “training” and “staff morale” items, according to the records and current and former employees….

Top USAID contractor allegedly billed taxpayers for Redskins tickets, alcohol
Source: Scott Higham and Steven Rich, Washington Post, February 9, 2015

Two weeks after being suspended from government work, the leading development nonprofit for the United States in Iraq and Afghanistan has purged numerous longtime senior executives amid a widening investigation of allegations of “serious” financial misconduct. International Relief and Development, headquartered in Arlington, Va., allegedly used taxpayer money for Redskins season tickets, personal travel and meals, and alcohol at company receptions and retreats, according to current and former government and nonprofit officials. Last May, The Washington Post examined allegations of poor performance and excessive pay at IRD, which has collected $2.4 billion since 2007 to undertake some of the most ambitious projects in the war zones and elsewhere for the U.S. Agency for International Development…..

Big budgets, little oversight in war zones
Source: Scott Higham, Jessica Schulberg and Steven Rich, Washington Post, May 4, 2014

…After the United States launched the wars in Iraq and Afghanistan, the mom-and-pop nonprofit corporation boldly ramped up, undertaking some of the federal government’s biggest and most ambitious projects in the battle zones, everything from building roads to funding wheat production. In doing so, International Relief and Development increased its annual revenue from $1.2 million to $706 million, most of it from one corner of the federal government — the U.S. Agency for International Development. IRD has received more grants and cooperative agreements from USAID in recent years than any other nonprofit relief and development organization in the nation — $1.9 billion. Along the way, the nonprofit rewarded its employees with generous salaries and millions in bonuses. Among the beneficiaries: the minister, Arthur B. Keys, and his wife, Jasna Basaric-Keys, who together earned $4.4 million in salary and bonuses between 2008 and 2012….. In the world of humanitarian NGOs — nongovernmental organizations — those kinds of salaries are unusual. Rarer still are bonuses of any kind….It is not unusual for government officials to move into the private sector for higher salaries. Before joining IRD, the officials received letters from USAID requiring them to pledge not to take part in any programs that may conflict with the responsibilities they had at the agency. IRD officials said they hired the USAID employees for their expertise, not their connections. As acting director of USAID, Alonzo Fulgham made $199,418. As vice president of IRD, he received $330,000. Jeffrey Grieco made $185,000 as the top public affairs official at USAID. As chief of public affairs at IRD, he received $225,000……

If the Government Competes Against the Private Sector, Everybody Wins

Source: Eric Schnurer, The Atlantic, March 11, 2015

When civil servants are pitted against businesses, they actually secure most of the contracts put out for bid. … Chicago is not alone in pursuing managed competition. It is ubiquitous in the United Kingdom, which has had at least 3,500 such competitions. In this country, cities including Phoenix, Charlotte, Indianapolis and Philadelphia have pursued managed competition as a strategy for cutting cost and improving service. ….

…Construction workers repairing sidewalks were working the standard eight-hour shifts, five days per week. Pouring a load of cement, though, takes about five hours to complete, meaning they could only pour one load per day, or five per week. If the city went to a 10-hour, four-days-per-week schedule, however, as the unions suggested, the crews could pour two loads per day, eight per week—a 60 percent increase in productivity at no additional cost and with savings on fuel and equipment rental. … The Phoenix trash-hauling operations have become legendary as the fountainhead of managed competition…. In 1992, Goldsmith targeted roughly 80 city services for privatization. Again, as public employees began to realize that their futures lay in competing, they began to win more and more of the contracts. Indianapolis’ fleet services department got so good at what it did, in fact, that it started expanding its “business” to service other quasi-governmental entities….

…..It may surprise some people to know that, in most instances where such “managed competition” has been tried, the in-house government workers have almost always beaten out the private sector. …In sum, there’s no good reason why the private sector shouldn’t be allowed to compete to provide many, if not most, government services—but there’s no good reason why government shouldn’t, and can’t successfully, compete back….